Amazon is in talks to acquire AI startup Decart in a deal reportedly worth around $7bn, as competition intensifies for AI computing power and chip technology.
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Amazon.com AMZN 3.29%increase; is in talks to acquire artificial-intelligence startup Decart in a deal that could be valued at around $7 billion, according to people familiar with the matter.
San Francisco-based Decart’s software makes it easier for developers to switch between different AI chips, a capability that is becoming increasingly important as companies race to secure more computing power.
A deal could come together soon, the people said, assuming talks don’t fall apart or another suitor doesn’t emerge.
Decart has raised more than $400 million in venture capital funding from investors including Sequoia Capital, Benchmark and Radical Ventures, according to PitchBook. It was valued at nearly $4 billion in May.
The company was founded in 2023 by three Israeli engineers, brothers Dean and Orian Leitersdorf and Moshe Shalev. Decart is also developing world models called Lucy and Oasis. World models can generate and simulate real-world 3-D environments.
Amazon has developed its own custom AI chip, Trainium3, in competition with Nvidia, which continues to dominate the market for graphics processing units, the specialized chips powering the AI boom. Amazon Web Services gave Decart early access to the chip in 2025 after meeting with the company and being impressed by its founders, The Wall Street Journal has reported.
Amazon’s other sizable acquisitions in recent years include a $6.5 billion deal for the MGM movie and television studio in 2022 and a roughly $11 billion deal for Starlink rival Globalstar announced earlier this year.
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Surging demand from AI data centres has driven flash memory prices up fivefold over the past year, giving suppliers such as Kioxia greater leverage over Apple. The shift is increasing storage costs for the iPhone maker, putting pressure on profit margins and contributing to higher prices across its product lineup.
3 min
During a ride in a Southern California desert, sales executive Scott Nelson stopped his dirt bike, pulled out a rifle and shot his old iPod.
Nelson sold flash storage to Apple AAPL -0.94%decrease; down pointing triangle and hated feeling like he always got the worst end of the deal. His Japan-based manufacturer, Kioxia, had little leverage. Apple was the world’s biggest buyer of flash—the chips in iPhones that store photos, music and apps—and used its position to squeeze every cent from suppliers. Apple bullied flash makers into opening their books so it could monitor sales, making sure no one else got a better deal.
Kioxia and other flash makers stewed as Apple paid them pennies for flash storage that the iPhone maker resold to customers for dollars. The disparity in bargaining power had galled Nelson, who used Android phones in protest.
Nelson kept the broken pieces of his iPod, the first Apple device to use flash. They sit on his desk and hold a special reverence now that the tables have turned.
In the past year, demand by AI hyperscalers has quintupled prices for flash, according to research firm TechInsights, opening a new era for Kioxia and other suppliers. Two years ago, Apple bought nearly twice the flash storage of Microsoft, Amazon, Meta and Google combined, according to TechInsights estimates. Hyperscalers are now buying double Apple’s share.
Flash memory suppliers and their sales teams privately expressed their glee at Apple’s comeuppance during chitchat at the industry’s largest conference this summer in Santa Clara, Calif. AI deals have given Kioxia sales executives and other flash suppliers new leverage to charge Apple higher prices.
Meta, Microsoft and Amazon signed contracts with Kioxia this year to secure long-term supply by committing to higher prices. The contracts protect Kioxia’s profits if the market turns. The company declined to comment.
Hyperscalers can afford to pay more. Flash storage is a smaller part of building a data center than making an iPhone, and accounting rules allow companies to spread the cost over years.
Apple is expected to spend $25 billion on flash storage this year for about the same amount it bought for $6 billion in 2025, according to estimates by TechInsights. Tim Cook, Apple’s executive chairman, compared escalating memory chip prices to a “100-year flood.”
Yet Apple had ignored analysts’ warnings and was caught off guard, said people familiar with the company’s procurement practices.
Company executives believed they knew the market better than anyone else, the people said. Flash that cost $68 a gigabyte in 2005 had fallen to a nickel by 2023. Now, demand by the AI industry has lifted the price to more than 30 cents a gigabyte, a 550% jump, threatening Apple’s steep profit margins from selling extra storage.
Buyers of the iPhone 17 Pro paid Apple $200 last year for double the storage of its 256-gigabyte base model. The extra storage at the time cost Apple $15 and has since shot up to $66, according to an analysis by The Wall Street Journal.
“Apple has historically driven a very hard bargain with memory suppliers,” said Walt Coon, an analyst at TechInsights. “And there’s no shortage of satisfaction among suppliers now that the balance of power is shifting.”
“We’ve worked with many of our suppliers for decades, and we deeply value their partnership over the years,” Apple said in statement. “We look forward to continuing our important work together.”
Apple recorded an average gross profit of more than 80 cents for every dollar it charged iPhone and iPad buyers for extra storage since it first released those devices through 2025, the Journal found. For Mac computers sold since 2010, it averaged nearly 80 cents.
In recent months, Apple raised prices for nearly all of its products. Prices rose an average of 13% for iPhones, an increase that included older models which typically get a price cut.
The question for Apple is whether consumers will react to the higher prices by keeping their iPhones longer or whether they will continue to buy at their usual pace. For flash-storage makers, the question is when—or if—Apple will regain its flash-market leverage.
“It’s been a love-hate relationship between Apple and the flash industry,” said Mark Newman, an analyst with Bernstein Research. Apple has sustained the manufacturers for years, he said, but its power to cap prices, while beneficial to shareholders, left suppliers feeling “screwed.”
In 2001, engineers at Kioxia, then called Toshiba, showed two Apple executives a 1.8-inch-diameter, 5-gigabyte hard drive they had developed but didn’t yet know what to do with.
