Rolfe Winkler at The WSJ: ‘The Beleaguered Chip Sellers Getting Their Revenge on Apple’

Rolfe Winkler, in a crackerjack story for The Wall Street Journal (gift link):

Blevins, who left Apple in 2022, sometimes set up back-to-back meetings with suppliers so that rival sales teams might run into each other, stoking competitive tension. Sales representatives learned to pack nutrition bars to sustain them through negotiating sessions that Apple executives sometimes pushed past midnight without a dinner break. Blevins’s bad-cop reputation gave his staff leverage: They threatened to call him in if contract terms weren’t to their liking.

One significant contract term allowed Apple to audit its suppliers’ books. Flash makers typically had to designate Apple as a “most favored customer,” which guaranteed that no other buyer got a lower price, according to people familiar with the agreements. Apple’s audits allowed it to verify that no one paid less.

Apple caught Micron selling flash at cheaper prices to another customer and won an arbitration settlement worth tens of millions of dollars more than a decade ago, said people familiar with the dispute. Apple audited its suppliers so often that Blevins negotiated a volume discount with the auditor, Deloitte.

The whole story is a fascinating and entertaining read. But I don’t get the “revenge” angle in the headline. The biggest buyers can negotiate the best deals. Apple used to be the biggest buyer, by far, for flash memory chips. They negotiated, with hardball but above-the-board tactics, the best deals. Now, Apple isn’t the biggest buyer — the AI datacenter hyperscalers are. Apple no longer gets the best deals. But they’re still getting fair deals. Apple is still negotiating the best deals it can for itself. So where is the “revenge”? The pinch mostly isn’t being felt by Apple — it’s being felt by Apple’s customers, who now face significantly higher product prices.

I included “mostly” in the preceding sentence because Winkler, in collaboration with the research firm TechInsights, makes the case in the piece that the rising costs of flash memory have eaten into the remarkably juicy profit margins Apple has historically earned from higher-storage upgrades.

What I also don’t get, at all, is the participation in the story by Scott Nelson, the chief marketing officer at Kioxia (which I learned in this story is the new name for the company formerly known as Toshiba Memory Corporation), a major flash supplier. Nelson told Winkler he so loathes Apple that he shot his old iPod with a rifle and keeps the pieces on his desk. The article ends thus:

The industry’s low point came in 2023. The Covid-era, work-from-home device boom cooled, and flash prices bottomed out at 5 cents a gigabyte. Bernstein Research estimated the flash industry generated operating losses of $19 billion that year, while Apple earned $14 billion in gross profit selling extra flash storage.

Those were tough times that “I hope we don’t ever see again,” said Nelson, the Kioxia sales executive.

Yes, I’m sure the current AI datacenter mania will last forever, the bubble will never burst, and that even if it does, that no one at Apple will remember Nelson’s participation in this story.

★ Thursday, 29 October 2026