Lynx Equity Strategy issued a note warning that Apple may be vulnerable to "further downside" following constructive checks into the company's NAND flash supply chain. The analysts flagged a worsening relationship with long-time supplier Kioxia, and said that negotiations have broken down to the point where Kioxia faces a "margin shortfall" after selling to Apple under lower long-term-agreement pricing.
According to Lynx, the dispute has the practical effect that Kioxia "may be shipping to Apple less than Apple's forecasted demand," prompting Apple to pursue alternative sources of NAND memory. That move has immediate cost implications: the firm reported that Apple has been "forced to approach Samsung to fill the supply shortfall." Without long-term contracts in place, Samsung is "free to quote current market price," which Lynx said could be materially higher.
Lynx cited an overnight report from Taiwan indicating Samsung "may have ratcheted up NAND pricing by as much as 100%," and suggested Apple is likely among the customers subject to such price moves. These supply-cost dynamics underpin Lynx's view that the market may be underestimating the threats to Apple's margin profile, even as the stock has already declined by roughly 10 percent year to date.
The firm also highlighted technical risk tied to product integration. Lynx wrote that Apple’s flash controller is "optimized for Kioxia's NAND process," and warned the controller "will not work well with Samsung's NAND process," increasing the chance of performance problems and potential customer returns. In its note Lynx said, "The Street is underestimating the impact," and concluded that both margins and the share price could experience additional pressure going forward.
Context limitations: The note focuses on supplier negotiations, reported price moves, and controller compatibility as communicated by Lynx Equity Strategy. It does not provide additional supply, sales, or timing details beyond those cited by Lynx.