Apple says rising memory chip prices are likely to continue into 2027, putting pressure on the cost of making iPhones and iPads. CEO John Ternus described the current increase as unprecedented and said it would be difficult for the company to shield its margins from further effects in coming quarters.
For the quarter ending in December, Apple expects a gross margin of 45% to 46%, down from 47.9% in the previous quarter and below analysts’ estimate of about 46.7%. Finance chief Kevan Parekh said higher memory costs are the main reason for the anticipated decline.
Ternus said memory expenses had already risen from the previous quarter and were expected to climb further by the end of the year. Apple has offset some of the increase using components bought earlier, lower prices for other parts and price adjustments on some products. The company recently raised prices on some iPhone 17 models by US$100.
Apple also increased its purchasing commitments with suppliers by US$33 billion between June and September, seeking to secure components and reduce the risk of memory shortages. However, the benefit of older, lower-cost inventory is expected to fade over time.
Supply constraints could affect iPad deliveries in the December quarter, according to Chief Operating Officer Sabih Khan. The pressure comes as Apple expands its product range and spreads iPhone launches across the year.
In the fiscal quarter ended in September, Apple reported revenue of US$114.48 billion, up 11.7% year over year. iPhone sales reached US$57.58 billion, an increase of 17.5%. Despite the results, the company’s shares fell as much as 4% during its earnings call after it outlined the expected margin pressure. Continued memory price increases in 2027 could lead Apple to reconsider pricing and production plans to protect profitability.
Sources: Canaltech.