Apple Rebates NAND Flash to Make Big Earnings: Costs $10.7 to Sell $100
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The Apple iPhone 4S has a 16GB version and a 32GB version. The difference between the two is that the NAND flash memory has a different capacity, and the 32GB version is 100 US dollars higher.
However, according to a study by Bernstein Research, Apple has a big discount in purchasing NAND flash memory, which is only 0.67 US dollars per GB, 16GB is equivalent to 10.72 US dollars.
From this point of view, Apple's profit strategy is quite successful. What makes analysts strange is that Apple's strategy is so successful and why competitors do not follow suit.
The report wrote: "In the fourth quarter of 2011, Apple estimated operating profit will reach 2.2 billion US dollars, gross margin 78%, purely because of Apple's original models in the increase in the capacity of larger flash memory. In addition, these profits come mainly from iPhone, but other mobile phone OEMs did not follow Apple's strategy.Similarly, Apple’s profits from reselling NAND are nearly twice that of NAND suppliers' profits, and operations obtained through the resale of NAND flash memory. Profits accounted for 20% of Apple's total operating profit in the previous quarter, and annual operating profits reached US$10 billion."
In contrast, Android phones generally only provide the specified 32GB flash memory, and allow users to choose to install the SD card. This is good for users, but it is not good for manufacturers, such as Samsung.
Globally, Apple is still the largest purchaser of NADN flash memory, which is estimated to account for 23% of global NAND flash memory consumption in the previous quarter. According to the report, Apple products consumed 1.45 billion GB of NAND flash memory in the fourth quarter of 2011. The iPhone accounts for 50% of Apple's consumption, and iPad accounts for 30%. This quarter, the world is expected to produce 6.4 billion GB of NAND flash memory.
To this end, analysts believe that flash memory provider SanDisk rated as "overweight", target price of 75 US dollars.