Apple CEO Tim Cook told the Wall Street Journal in an interview published Wednesday that the company plans price increases on its products due to ongoing memory shortages. Cook called the hikes 'unavoidable' and the memory situation 'unsustainable.' The disclosure comes as AI chip demand, largely driven by Nvidia processors, has created worldwide memory shortages affecting smartphone, PC, and device makers who must compete for limited supply from three primary vendors: Micron, SK Hynix, and Samsung.
Cook Describes Memory Shortage as Unsustainable
Cook told the Wall Street Journal that Apple plans price increases but declined to say when they would go into effect or which devices and models would be affected. 'The world is being disrupted by AI and, at the same time, even before we start reaping the benefits of AI in our devices, we are already paying the bill,' said Francisco Jeronimo, an analyst at IDC. Cook stated that Apple is 'willing to use our balance sheet to help be a part of the solution.'
AI Chip Demand Drives Memory Supply Constraints
AI chips, largely made by Nvidia, are consuming available memory and storage from a handful of vendors. One Nvidia Blackwell B200 chip has 192GB of high-bandwidth memory, with eight chips capable of fitting into a single server and over 2,000 servers arranged into a single cluster. An Apple iPhone, by contrast, comes with 8GB or 12GB of DRAM. When a supplier like Micron makes one unit of HBM memory, it has to forgo making three units of more conventional smartphone memory, according to previous CNBC reporting.
Analysts Predict Premium Device Price Increases
IDC's Jeronimo expects Apple to boost the price on the $999 iPhone Pro and $1,199 iPhone Pro Max by $100, and to leave lower-end devices alone. Analysts at BofA Securities, in a note on Thursday, agreed with that assessment and said they're also expecting price increases for most Mac and iPad models. Average smartphone prices are expected to increase by 20% this year, according to IDC. Apple has in recent months launched the $599 MacBook Neo and $599 iPhone 16e targeting budget-conscious consumers.
Memory Suppliers Face Capacity Limitations
Cook discussed the types of memory Apple needs, namely DRAM for short-term data storage and NAND for long-term data storage. Production capacity comes from three primary suppliers: Micron, SK Hynix, and Samsung. Memory suppliers are building new factories, called fabs, but much of the additional capacity could still go to the more profitable HBM memory, and the capacity is expected to take years to come online.
FAQ
What did Apple CEO Tim Cook announce about product pricing?
Tim Cook told the Wall Street Journal that Apple plans price increases on its products due to ongoing memory shortages, calling the hikes 'unavoidable' and the memory situation 'unsustainable.' Cook declined to specify when the increases would take effect or which devices would be affected.
Why is Apple facing memory shortages?
AI chip demand, largely from Nvidia processors, has created worldwide memory shortages. AI chips consume available memory supply from three primary vendors (Micron, SK Hynix, Samsung), forcing smartphone and PC makers to compete for limited capacity. When suppliers produce one unit of high-bandwidth memory for AI chips, they forgo making three units of conventional smartphone memory.
How much are smartphone prices expected to increase?
Average smartphone prices are expected to increase by 20% this year, according to IDC. Analysts predict Apple may raise prices on the $999 iPhone Pro and $1,199 iPhone Pro Max by $100, while BofA Securities analysts expect price increases for most Mac and iPad models.
