The $70 Chip War: Why Google is Firing Execs and Apple is Bracing for a 230% Price Surge

At present, technology companies are dispatching an increasing number of employees to South Korea to negotiate with memory chip suppliers. These firms are not limited to Google and Microsoft; they also include major smartphone manufacturers, all of which depend on vast quantities of memory chips across multiple categories.

According to the report, Microsoft, Google, and Meta have already sent senior procurement executives to South Korea to hold talks with Samsung and SK Hynix in hopes of securing additional memory supply. At this stage, pricing is no longer the central issue; the real problem is a severe imbalance between supply and demand. Hyperscale data center operators such as Google and Microsoft require HBM (High Bandwidth Memory) chips to manufacture AI accelerator cards, and without sufficient memory supply, Google cannot expand production of its custom TPU accelerators.

The report notes that Microsoft executives recently visited SK Hynix’s headquarters to discuss a new long-term agreement focused on memory products. However, SK Hynix appears to be negotiating from a position of strength, reportedly stating that supplying memory under Microsoft’s proposed terms would be extremely difficult. The talks ended abruptly, with Microsoft representatives leaving in frustration.

Yet these episodes pale in comparison to Google’s response. According to sources, Google went so far as to dismiss a procurement executive outright, citing a lack of foresight and personal responsibility for failing to secure advance agreements with memory suppliers.

Current rumors suggest that Google, Microsoft, Meta, and other major technology companies are willing to accept virtually any price, provided they can place memory orders without strict volume caps. Nevertheless, both SK Hynix and Micron have reportedly given a firm “no” to requests for significantly increasing HBM production.

Apple is also feeling the strain of the memory shortage. Its long-term agreements with key memory suppliers are set to expire in January next year, at which point Apple may be forced to pay premiums of up to 230% for LPDDR5X memory chips—cost increases that are likely to ripple through to the prices of its products.

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