Memory crisis hits such extremes that ‘even Apple can’t be safe’

Over the last few years, consumers have been flocking to AI chatbots and agents, taking advantage of powerful new AI models that are changing the way we live and work. Now they’re paying for it, but probably not in the way they expected.

The AI ​​boom has led to unlimited demand for memory, creating a worldwide shortage that has driven up prices. This is a big enough problem Apple is finally telling consumers to get ready to open their wallets.

Apple CEO Tim Cook said: Wall Street MagazineThe company is planning price increases on its products due to the ongoing memory shortage, he said in an interview published Wednesday. He described the marches as “inevitable” and the memory situation as “unsustainable.”

“The world is being disrupted by AI, and at the same time, we are already paying the bill even before we start enjoying the benefits of AI in our devices,” IDC analyst Francisco Jeronimo said in an interview.

Artificial Intelligence chips are largely Nvidiait takes all the memory and storage a handful of vendors can produce. Smartphone, PC and other device makers need to fall in line or pay more for accelerated access. But Apple’s surprising announcement, made less than three months before Cook steps down as CEO, underscores the widespread impact of the shortage. Until now, the iPhone maker was thought to be particularly insulated from price increases due to its market power.

“This tells you the depth of the problem,” said Ranjit Atwal, a Gartner analyst. “Not even Apple can be safe as long as they have all the expertise and long-term planning and everything else. It’s beyond their capacity to limit the impact.”

In the interview, Cook refused to say when the price increases would apply and to which devices and models. An Apple spokesperson declined to comment to CNBC.

One possibility is that Apple will reserve the price increases for its premium devices, such as its Pro series phones, because higher-end customers are more likely to absorb the hit. IDC’s Jeronimo expects Apple to raise the price of the $999 iPhone Pro and $1,199 iPhone Pro Max by $100 and leave the lower-end devices alone.

Analysts at BofA Securities agreed with that assessment in a note on Thursday and said they expected price increases for most Mac and iPad models.

But there is another potential approach that involves taking advantage of the situation to gain more market share.

Apple has been targeting budget-conscious consumers with the launches of the $599 MacBook Neo and $599 iPhone 16e in recent months. Some analysts think Apple could benefit from Android device manufacturers lowering specifications or increasing prices. According to IDC, average smartphone prices are expected to increase by 20% this year.

“This could be a great opportunity for Apple to say that Android will face a real challenge from the rise in chip prices,” said analyst Simon Bryant of research firm CCS Insight. “And maybe Apple can actually use this to capture a huge market share from Android.”

Typically, Apple’s price increase comes with new features. For example, the company increased the starting price of its Mac Mini desktop to $799, up from $599 in May, while adding storage.

For on-device AI, Apple is currently packing more RAM into every phone. Upgrades like a new dedicated Siri voice and dictation feature The new iPhones, iPads and Macs expected to ship this fall will be few in number because older, cheaper ones won’t be able to handle memory-hungry options.

In the Journal interview, Cook talked about the types of memory Apple needs, namely DRAM, used for short-term data storage, and NAND, often called a solid-state drive, used for long-term data storage.

AI chips for data centers use high-bandwidth memory, which is faster and requires more power than smartphone memory. An Nvidia Blackwell B200 chip has 192GB of high-bandwidth memory. Eight of these can go into a single server, and more than 2,000 servers can be arranged into a single cluster.

In comparison, an Apple iPhone comes with 8GB or 12GB of DRAM.

The problem is that all of this requires production capacity from three main suppliers: MicronSK Hynix and Samsung. When a supplier like Micron produces one unit of HBM memory, it is forced to give up making three more units of traditional smartphone memory, CNBC previously reported.

memory suppliers building new factoriesIt’s called fabs, but much of the additional capacity could still be moved to the more profitable HBM memory, and it’s expected to take years for the capacity to come online.

Cook told the Journal that Apple could use its cash reserves to help increase supply.

“We are ready to use our balance sheet to be part of the solution,” he said.

WRISTWATCH: Apple increases pricing power as memory costs rise