Is Apple Losing Dollars to Save a Few Cents?

Is Apple Losing Big Bucks by Trimming its Costs by a Few Cents?An article in a recent issue of Business Korea posits that Apple may be having trouble stemming from the company’s adoption of TLC flash in it’s new iPhone 6.

The article states:

considering that technical defects mainly occur in the 128GB version of the iPhone 6 Plus, there might be a problem in the controller IC of triple-level cell (TLC) NAND flash.

The problem has led to numerous warranty replacements and the looming prospects of a recall.

(Note that the link between this issue and TLC flash is simply conjecture at this point.  The smaller iPhone 6 offers the same 128GB flash size, and hasn’t suffered from as many field failures.)

The Business Korea article got The Memory Guy thinking about why Apple would have used TLC flash in this product.

According to InSpectrum, a site mainly focused on tracking spot prices for components, the lowest end-October spot prices for NAND flash were $0.31/GB for MLC and $0.26/GB for TLC.  Apple has huge purchasing power, and is likely to be enjoying prices similar to these.  The difference between these two numbers is $0.05/GB.

The 128GB iPhone 6+ cited in the article would thus save $6.40 by using TLC rather than MLC.

Compare this to the list price difference between a 128GB iPhone 6+ ($499) and that of a 64GB model ($399).  That’s $100, just for a memory upgrade.

Given the price difference it seems a shame that Apple saved so little when it sells the phone for so much.  One workmate of mine quips that the price difference may be necessary to cover the cost of a recall.  It would seem, though, that Apples stockholders would be a lot happier if a recall could be prevented instead.

Whether the problem stems from TLC or from something else, the environment at Apple is probably very tense at the moment.

After The Memory Guy originally published this post, DigiTimes on November 6 published a short article in which unnamed NAND flash makers argued that Apple would not have used TLC flash for cost savings but for space savings, and that this would have only been done after the chips had passed rigorous testing.  The article had no inputs from Apple, nor any more concrete evidence.

The Memory Guy will be watching this space carefully to learn what the real culprit is finally found to be.

2 Responses to Is Apple Losing Dollars to Save a Few Cents?

  • Steven Tang says:

    Samsung has built a NAND flash factory in Xian China and Toshiba is scouting for a site, is this the next battle ground for flash – lower costs ?? near design activities?

    • Jim Handy says:

      Steven, Thanks for the comment.

      It’s completely normal for memory chip makers to build new fabs. In some cases they need these new fabs because the market is growing. In other cases they need the new fabs because their old fabs can’t be upgraded any further and they have to start over.

      Samsung Xian is Samsung’s first 3D NAND fab. There will be others. It’s probably easier to build a new fab for 3D than to convert an old fab from planar to 3D.

      Jim

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