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Apple looks better and better as every day passes. Other players going deeply into debt to build out massive infrastructure, VCs pumping up the model ecosystem
by cmiles8 3mo ago
Apple looks better and better as every day passes. Other players going deeply into debt to build out massive infrastructure, VCs pumping up the model ecosystem that is now a total commodity.
Apple’s just been sitting there with solid cashflow waiting for all this to implode and then have on-device models with their own chips.
Apple will own the end device while the rest of the world is fighting over a pure commodity. It will burn hard and Apple will laugh all the way to the bank.
- throwaway63467 3mo agoIsn’t Apple potentially under a lot of pressure due to the DRAM prices as well as having to compete with AI for fab capacity? Before all the price hikes their products were already priced at the top of the market so I would assume that memory getting more expensive will impact their sales or margin quite a bit as they can’t subsidize hardware like AI companies do (they can of course eat into their own margins a bit which I think they already do). So not sure if what happens right now is great for them, if the memory market collapses it will of course be good.
- quickthrowman 3mo agoEveryone is paying more for RAM these days, I expect Apple to maintain their margins.
- cmiles8 3mo agoYes it does impact all hardware makers and they raised prices as a result. But again remember the financial reality here… DRAM is in short supply because of the demand for models propped up by VC subsidies and infrastructure providers going deeply into debt to buy all this stuff just as folks are realizing we’re on track to over build capacity. So yes Apple gets impacted a bit in the short term but in the long term they’ll gleefully watch it all burn.
- alpha_squared 3mo ago> Isn’t Apple potentially under a lot of pressure due to the DRAM prices as well as having to compete with AI for fab capacity? I'd qualify this with for now. It's not entirely clear what happens in the event the AI industry implodes, but I do think there will be a glut of memory and hardware up for grabs. It very well could crash the consumer hardware market as a result. The AI obsession and investment has burrowed so deeply across the US economy that I can't think of a single industry that won't be impacted, including agriculture.
- thewebguyd 3mo ago> It very well could crash the consumer hardware market as a result Tbh, I hope it does. Prices are outrageous, and I'm a firm believer in personal computing/having access to powerful hardware, privately and locally, is hugely important. On a more selfish note, I miss the days of being able to build an outrageously powerful desktop for myself for relatively cheap. For now I'm still holding onto my AM4 motherboard w/ 64GB DDR4 and an aging GPU, praying my 7 y/o GPU holds up long enough for prices to drop again.
- bpavuk 3mo ago64 GB! you are lucky :) sitting there with 16GB, a GPU that already shows the signs of strain, and AM4 Ryzen 5 5600G. (MacBook Air M1 equivalent in single-threaded tasks.) apparently the CPU requirements slowly crept up across the line. and then there is looming AVX512. why "looming"? because at some point enough people will move to it that software will require AVX512.
- rbanffy 3mo agoMaybe a year from now we'll all be using MI300As and EPYC 9600s to read e-mails. Or Nvidia Veras, maybe AWS will sell some of their Graviton stuff in an effort to offset their capex. Unfortunately, I don't think IBM Cloud will suffer enough for me to play Tux Racer on my very own Z17.
- bpavuk 3mo agoactually I'm looking forward to that :3 but that requires Claude et al. going bust and HN is gonna kill me if I wish that publicly
- rbanffy 3mo agoI would also be very sad to lose one of my best coworkers. Everybody in the office treats Claude as their own assistant. Just today Claude reminded me I forgot to add a database zone migration to my fault-injection experiment. Not only he reminded me, he also implemented it with perfect consistency with project guidelines.
- dubcanada 3mo agoLet's be real here, Apple does not have to compete with AI for fab capacity, they can outbid anyone if they want. They have more money and longer contracts then anyone else. Apple customers will just end up paying for said DRAM price inflation. The ones who will actually suffer is Apple 2.0 (presumably a different competing company), start ups, research, companies that are not worth trillions.
- blks 3mo agoThey are, for now; but also Apple is known for making long term price locked contracts and ensuring availability of semiconductors for their devices.
- Someone 3mo ago> Isn’t Apple potentially under a lot of pressure due to the DRAM prices Maybe. On the one hand, if there is a strong ceiling to what users are willing/able to pay for a smartphone (might not be true, with all those people making $$ on the stock market), they will have to cut prices. On the other hand, if one part gets more expensive, premium phones need smaller relative price increases than budget phones. Certainly, if they are willing to accept lower margins, premium product might get more attractive. Also, iPhones tend to have less RAM than competitors, so this might hit other premium manufacturers harder than Apple.
- ProfessorLayton 3mo agoApparently RAM and SSD costs have risen so much recently that the bill of materials on the next iPhone could exceed the entire cost of the current one just on RAM/SSD alone [1] [1] https://images.macrumors.com/t/PtKleXF2po_g3qSuA6VMOE90WEM=/2500x0/filters:no_upscale()/article-new/2026/07/iphone-18-pro-max-counterpoint-bom.png https://images.macrumors.com/t/PtKleXF2po_g3qSuA6VMOE90WEM=/...
- randysalami 3mo agoHoly hell that’s a crazy image. Can’t even fathom how they will go forward.
- sillywalk 3mo agoInteresting. If it's accurate, Apple sure has a nice markup. Side note: I wished they'd chosen more distinctive colours for the charts.
- telesilla 3mo agoCouldn't Apple afford to make it's own RAM fab etc at this point and have a dedicated pipeline of parts for its own products?
- SllX 3mo agoRAM production is historically not a great business to be in. It’s a mint today, but it’s an incredibly tough business to break into & by the time any hypothetical Apple RAM fab is up & running, it will already be losing money. To give you some idea, here’s an Asianometry video describing Taiwan’s prior DRAM attempts: https://youtu.be/ehT3U935Pww https://youtu.be/ehT3U935Pww
- CoolestBeans 3mo agoSure, but DRAM is a commodity and is classically cyclical. This is a particularly large cycle but so long as the historic pattern holds (and there's not a ton of reason to think it won't unless the hyperscalars can go into greater debt indefinitely which given inflation and interest rates they can't) Apple just needs to get through this peak in prices, which they have a LOT of ammunition to do so. Having to raise prices isn't a great look but when they come out the other side they can drop pirces and get a boost in volume or they can keep them high and enjoy a bigger profit margin.
- doom2 3mo ago> Having to raise prices isn't a great look but when they come out the other side they can drop pirces The fun part is that they can drop prices but they'll still be higher than before the initial price increase, thereby increasing volume _and_ getting some extra profit. Consumers still lose.
- InsideOutSanta 3mo agoApple already had giant margins before and could easily absorb memory price increases. The fact that they did not and instead decided to increase prices shows how confident they are that people will buy their hardware anyway.
- wpm 3mo agoThey did absorb them, this price madness began a year ago and they only increased prices last month.
- philistine 3mo agoApple has long term contracts for every part that goes in the most complex supply chain on the planet. Do you think they call their suppliers every morning asking for 2 million chips? Their price increases were a mixture of absorbing some of the increase and passing what they won't on us.
- wpm 3mo agoSo...we agree.
- altmanaltman 3mo agoNo Apple was not sitting there and waiting as if its some grand plan. They tried their VR device which they don't even talk about now. They were late to AI and yes if the bubble bursts they will be at a better position but it's not some grand master strategy. Even inside apple there's been a lot of talk about how badly the company handled AI. As for laughing all the way to the bank, I am sure memory manufacturers and Nvidia was definitely join them regardless of what happens. Also comparing Apple (literally one of the largest companies in the world) to a company burning VC money makes no sense.
- cmiles8 3mo agoVR wasn’t AI. As for the rest, they’re the only major tech company to not have a serious case of AI FOMO and dumping all their cash into that FOMO. Thats not an accident.
- budsniffer952 3mo agoYeah, VR was very clearly useless, and yet... Do you even know what FOMO is? The money is being spent in physical infrastructure, not the the metaverse.
- cloverich 3mo agoI believe their argument is: What happens to the value of that infrastructure when the value of the models is commoditized or more specifically, when everyone can run the "Good enough" model on their phone or laptop, instead of on Anthropic/Spacex/Google/OpenAI owned hardware? Its a fair one to make both ways imho. Clearly the compute is being used for value generating purposes. And also clearly higher tier models are becoming runnable on local hardware. (edit) I think also a comparable argument could be: What happens to the value of all that infra when the model is so commoditized, that Apple can delegate the more compute expensive tasks to whichever service is the cheapest on that day? Is Anthropic still valuable if they need to drop the prices of their models by 10x?
- njovin 3mo ago
- budsniffer952 3mo agoCell phones are commodities, so how does Apple maintain that cash flow? It's almost like there is more to it than that...
- eppp 3mo agoCell phones arent wheat. It is a pain to switch between OS's.
- GiorgioG 3mo agoCell phones may be commodities, but iPhones are not.
- neaden 3mo agoYeah, as an android user myself I switch brands all the time, but the iPhone users in my life all bought iPhones 15ish years ago and have kept doing it ever since.
- rbanffy 3mo agoThe good thing of the iPhone is that your next phone is just like the previous one, but faster. Some features are added, some change places and some are even removed or replaced, but it doesn't compare to, say, move from a Motorola to a Samsung - they might as well be different OSs. Last time I had to relearn how to use the camera (and I AM AN EXPERIENCED PHOTOGRAPHER!).
- HAL3000 3mo agoOthers are betting on AGI/almost AGI like system. It's a gamble because no one actually knows whether or when it will be possible to create it. But if their bets pay off, they could outcompete Apple. Basically, other companies are going all in on the next card, while Apple is holding back and waiting to see which cards are dealt.
- dan_gee 3mo agoIMO AGI is a bold-faced lie, backed by the age-old American fantasy of free labor. The whole concept seems quite ugly to me.
- dormento 3mo agoIn other words, the AGI hype kinda depends on AGI never being achieved. Billionaires don't want the worlds fundamental problems solved overnight for a simple reason: there's no money in that.
- dan_gee 3mo agoMoreso what I'm trying to say is that AGI is a return to the eighteenth/ninetheenth century fantasy of slavery as a business model. AGI means cruelty-free robot slaves.
- TimByte 3mo ago[dead]
- neaden 3mo agoThe problem is even if AI ends up being huge all these companies still have to worry about eachother and the Chinese models that are coming out. It's like a dollar auction and it's very possible we are already at the situation where they have all bid more than a dollar.
- engineer_22 3mo agoI just switched to iPhone and I have to say the UI is so bad. It will be my last.
- keeda 3mo agoCurious, why would Apple want to wait for "all this" to implode? They've had on-device silicon for AI for eons now (in AI-years), so they could have been executing their strategy, whatever it is, all this time, no? My outsider take is that Apple leadership never really believed in the capability of GenAI, and hence kept pursuing their pre-LLM strategy. An interesting signal about how that's working out now is that their AI org leadership was overhauled recently.
- rawgabbit 3mo agoIt's like you said, they don't believe there is a viable business yet.
- keeda 3mo agoBut they already have a billion devices with NPUs doing essentially nothing. I don't see any strategy at all, other than outsourcing a potentially core function to Google.
- rawgabbit 3mo agoIf you think your competitors are committing financial suicide by borrowing money they don’t have to fund a project with a dubious rate of return, you wait and see.
- keeda 3mo agoFine, but then why put specialized silicon in a billion devices, and then leave it totally unused by outsourcing their intended functionality to a competitor? And what do you do when that competitor (and others) release agents to manage users' personal while Siri is still a laughingstock? And then when that competitors (and others) are starting to build super-apps, how long would you continue to block super-apps and sue their makers to protect your App Store moat? To me, the "wait and see" approach looks more like "we have no strategy for the hottest technology revolution in decades that threatens a bunch of our moats." Maybe they're hoping that the bubble pops and then they can pick up a suitable AI company on the cheap -- thankfully they have buttloads of cash -- but you know what they say about hope and strategies... Personally I'm hoping for strong on-device AI capabilities to reduce dependency on the clouds / AI labs, but I'm losing hope that it'll be from Apple.
- classified 3mo agoWhen this bubble bursts, it will take down a lot more people than just those pumping up the bubble. Guess who will be holding the bag when the banks end up with outstanding loans that will never be repaid? There will not be much of a win for Apple when a good part of the economy crashes.
- red-iron-pine 3mo agohow do you sell globally relevant numbers of iPhones when no one anywhere can afford one? you either dilute the brand, or you hope the whales can keep you afloat