Apple CEO warns of memory crunch. ‘We’ll look at a range of options’
Apple CEO Tim Cook gestures as Apple holds an event at the Steve Jobs Theater on its campus in Cupertino, California, on September 9, 2025.
Manuel Orbegozo | Reuters
The global memory crisis played a huge role in the tech earnings season, which peaked this week. Apple CEO Tim Cook warned that this is just the beginning.
“We believe memory costs will have an increasing impact on our business,” Cook told analysts during the Q&A portion of the company’s earnings call on Thursday, after repeatedly telling analysts that the company faced “supply constraints” in the latest quarter. he said. “We will continue to evaluate this.”
Apple’s earnings report, which featured near-widespring success and better-than-expected revenue guidance, came a day after Meta and Microsoft said in their results that higher memory prices contributed to their higher forecasts for capital spending for the year.
Microsoft CFO Amy Hood said in a conference call that she expects a $25 billion impact from higher component prices while forecasting $190 billion in capex for 2026, up 61% from last year. Meta noted that “expectations for higher component pricing” contributed to the capex forecast increase from $135 billion to $145 billion.
In the tech world, executives are voicing concerns about rising memory prices, which is facing a worldwide crisis due to insatiable demand for AI infrastructure. every generation Nvidia The chip, the processor at the heart of the AI boom, packs more memory, further tightening an already stressed market.
memory generator MicronSamsung, whose shares increased by approximately 570% last year, is trying to increase capacity like its rivals Samsung and SK Hynix. With AI chips and data centers consuming so much supply, consumer devices like PCs and smartphones are running out of memory and therefore becoming much more expensive.
That’s why it was such an important topic in Apple’s conversation.
Cook said Apple’s 17 percent revenue growth in the second fiscal quarter exceeded its target “despite supply constraints.”
He said the impact in the December quarter was “minimal” and there was slightly more impact in the March period. In the quarter ending June, Cook said the major impact would be on several Mac models “given continued high levels of demand.”
Analysts wanted to know what Apple would do in response, but couldn’t get much in the way of details. “We’ll look at a range of options,” Cook said several times.
Since January, when AI memory began to run out, Wall Street has been trading with Apple and Dell How they will address the memory shortage and whether they will be forced to raise prices or reduce margins.
“Apple has shown that even the best operators cannot completely avoid memory crunch,” said Jake Behan, head of capital markets at Direxion. “Tim Cook’s warning of ‘significantly higher’ costs in the coming quarters shows how real the AI-driven supply shortage has become for the entire industry.”
Apple has largely avoided price increases so far. In March, the company announced a number of new products, including the iPhone 17e, a refreshed iPad Air laptop with an M4 chip in 11-inch and 13-inch sizes. It also introduced the MacBook Neo, a low-cost laptop that Cook acknowledged was in higher demand than he expected.
The memory conundrum will soon fall into the lap of new CEO John Ternus, Apple’s longtime hardware boss, who will replace Cook in September.
Eating expenses?
Apple will have the option of entering into long-term supply agreements to secure more favorable pricing, Morningstar analyst William Kerwin said in an email to CNBC. He stated that the memory generator sandisk He discussed “lots of new deals like this” on Thursday’s earnings call.
While Needham analyst Laura Martin didn’t know what Cook meant by suggesting the company consider options, she said it wasn’t good to see capacity constraints “for a company with core competency in hardware.”
Wall Street welcomed the news and reacted positively to Apple’s forecast of 14% to 17% revenue growth this quarter, sending the stock higher. Analysts had expected 9.5% growth to $103 billion, according to LSEG.
Gil Luria, an analyst at DA Davidson, told CNBC that Apple has been able to avoid an increase in iPhone prices, but “deals with memory suppliers may have to change.” He said some options for Apple could be to reduce available memory in products, raise phone prices or absorb lower gross margins by absorbing some of the extra cost.
IDC analyst Nabila Popal said the range of options may be related to rising iPhone prices, but they are not necessarily distributed equally across all models.
“I think next Spring they will focus the price increases on the Pro/Max while keeping the base model the same,” he said via email.
Some analysts have said the memory shortage represents an opportunity for Apple to gain market share this year as other manufacturers face even bigger challenges.
Morningstar’s Kerwin said of the latest results that he was “impressed with Apple’s profitability amid massive memory pricing inflation.”
Direxion’s Behan reiterated his view that Apple is in a better position than anyone else.
“Apple’s scale, balance sheet strength, and relatively cautious approach to capital spending will give it more flexibility than most to overcome these constraints over time,” he said.
WRISTWATCH: Apple blames the iPhone shortage on supply chain constraints.
