In a dramatic move highlighting a global tech crisis, senior Apple executives have been living out of hotels in South Korea for weeks. Their mission: to secure critical memory chip supplies from giants Samsung and SK Hynix. However, their extended stay appears to be yielding little success, with analysts warning that Wall Street is "way too optimistic" about Apple's ability to navigate the storm.
The Desperate Negotiations in Hwaseong and Pangyo
Apple has stationed its purchasing teams in business hotels in Hwaseong and Pangyo, strategically located near the massive manufacturing complexes of Samsung and SK Hynix. The tech behemoth is urgently trying to lock in two-to-three-year supply agreements for LPDDR5X RAM, a vital component for its devices. This desperation stems from a staggering price explosion in the memory market.
Since mid-2025, prices for these memory modules have skyrocketed by as much as 300%. A single 12GB memory module that cost Apple around $21 in early 2024 now carries a price tag of roughly $70 per unit. This surge has fundamentally altered the economics of smartphone manufacturing, with memory now accounting for over 20% of production costs, a sharp rise from just 15% a few months ago.
A Zero-Sum Game: AI Demand Squeezes Mobile Supply
The root cause of this crisis is the insatiable global demand for artificial intelligence (AI) hardware. The production of High-Bandwidth Memory (HBM), essential for advanced AI accelerators like Nvidia's H200, is consuming a massive share of manufacturing capacity. Each H200 chip requires eight HBM3E units, diverting resources away from standard mobile and PC RAM.
This shift has created a severe shortage. The situation is so tight that Samsung's semiconductor division recently raised DRAM prices for its own mobile division, Samsung MX, by 60-70%. Analyst Jukan from Citrini noted this reveals the extreme pressure in the market. "They're pushing such an absurd condition even on MX, which is part of the same family—so just imagine how much they're raising prices for other companies," Jukan stated. If Samsung is charging its sister division that much more, external customers like Apple are likely facing even steeper hikes.
Aggressive Stance from Memory Makers and Industry Fallout
Both Samsung and SK Hynix are holding firm, preferring short-term quarterly contracts over the long-term deals Apple seeks. They anticipate continued price surges through 2027 and are already planning aggressive increases. Industry sources indicate they are supplying server DRAM in the first quarter of 2026 at prices 60-70% higher than in the fourth quarter of 2025.
Apple is not alone in this scramble. Executives from other major tech firms, including Dell, Google, and Amazon, have also established prolonged stays near South Korean semiconductor plants. The real test for Apple arrives this month as Samsung and SK Hynix renegotiate their contracts with the iPhone maker.
While Apple's efficient iOS architecture and premium product pricing may provide a buffer to absorb some of these increased costs without immediately raising iPhone prices, the strain is unprecedented. The massive $3 billion in new AI chip orders from Chinese customers alone, following US export approval, further tightens the market. The memory chip wars have begun, and even the world's most valuable company is finding it difficult to secure its position.
