Apple CEO Cites 'Unprecedented' Memory Costs as Manufacturing Bill Jumps $33 Billion

Apple CEO John Ternus described current memory price increases as "unprecedented" during the company's November 2 earnings call. According to Tom's Hardware, while Apple has mitigated some impact by using lower-priced inventory, cutting other costs, and raising prices on select products, its manufacturing bill has climbed by $33 billion in just a few months. This sharp rise highlights how artificial intelligence infrastructure demand is tightening global DRAM and NAND supply.

Major suppliers including Samsung, SK Hynix, and Micron have warned that memory shortages could persist until 2028 as AI data centers absorb production capacity. For Apple, this signifies a fundamental shift in the cost structure of its hardware lineup, encompassing iPhones, Macs, and iPads. Although no new broad price hikes have been announced, Ternus expects memory costs to rise further in the December quarter, potentially forcing the company to absorb higher component expenses or adjust pricing strategies during the critical holiday shopping season.

Analyst Dave Nicholson noted that unlike tech companies pouring hundreds of billions into AI infrastructure, Apple faces a more quantifiable challenge: the direct impact of rising component costs on margins is easier to measure than the long-term returns on massive AI capital expenditures. However, this measurable pressure is eroding profitability. If memory prices do not stabilize quickly, Apple may need to implement further price increases to maintain gross margins, impacting consumer affordability and its competitive position in the premium market.