This is the first year that Apple (NASDAQ:AAPL) has started offering a 128 GB storage option on the iPhone. In doing so, Apple is looking to cater to power users that like to store boatloads of apps, games, and media on their devices.
However, there have been user reports of these higher storage models running into some pesky problems, including crashing and boot loops where the iPhone is unable to start properly. Well, the good news is that the Mac maker may have figured out the culprit and how to fix it.
More storage comes at a cost
Business Korea has a theory. Apple has switched to using a new type of NAND flash that enables greater storage. There are 3 primary types of NAND flash: single-level cell (SLC), multi-level cell (MLC), and triple-level cell (TLC). SLC, MLC, and TLC are able to store 1, 2, and 3 bits per cell, respectively, and the flash industry has been in transition in pursuit of higher storage levels and lower costs. The trade-off with jamming more bits in is higher failure rates, and TLC flash has inferior performance, reliability, and longevity.
The report suggests that the problem is stemming from Apple's use of TLC flash, and there is a problem with the memory controller. Interestingly enough, the controller is made by Anobit, the flash specialist that Apple acquired in 2011 and was one of its largest purchases to date at the time. As a result, Apple may transition back to using MLC flash in order to mitigate the issues that some users are running into.
Moving back to MLC flash technically has some negative margin implications, since MLC flash is more expensive TLC flash on a per-gigabyte basis. Still, it's a fairly modest incremental increase in component costs, and Apple has many other iPhone margin tailwinds going for it this quarter, including higher selling prices and operating leverage associated with increased volume during the holiday shopping season.
Besides, addressing any possible performance problems with Apple's most important product is well worth any added costs. Apple's more concerned about currency fluctuations.
There's been some speculation that Apple will issue a recall to address the issues. That's extremely unlikely though, since recalls are very public incidents that inevitably create negative publicity (just ask General Motors how its year has gone). At the same time, only a tiny portion of users are being affected, which makes a mass recall unnecessary.
9to5Mac reports that Apple is aware of the issues, with its sources saying the issues are not hardware related. Much like the overblown Bendgate controversy, Apple can easily address faulty units individually and quietly at its Genius Bar, potentially swapping out affected units as needed and avoiding bombastic headlines.
Evan Niu, CFA owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.