Apple Warns ‘100-Year’ Memory Crunch is Far From Over

Apple expects memory costs to continue climbing beyond the September quarter, warning that the unprecedented surge in DRAM prices that recently forced it to raise hardware prices is unlikely to ease anytime soon, according to executives during the company’s third-quarter earnings call.

The comments come as Apple prepares to unveil its next-generation iPhone lineup in September, and is expected to announce its first major iPhone price increase in years—by as much as $200—as it grapples with higher component costs.

“We reluctantly raised prices,” Apple CEO Tim Cook said during the earnings call. “We did it because we're in what I would characterise as a 100-year flood on the memory pricing, with exponential increases in memory prices.”

While Apple has partially offset higher memory prices through earlier inventory purchases and lower costs for certain non-memory components, Cook warned those benefits would diminish over time. 

“We have a benefit from some carry-in inventory in the September quarter. However, we believe we'll see decreasing benefit from this over time beyond the September quarter,” he said. 

Looking beyond September, Cook said memory prices are expected to continue rising, which ‘could drive an increasing impact on our business.’

Apple also acknowledged that supply-side options remain limited because the global DRAM market is dominated by three suppliers. “Obviously if there were more suppliers, that would be good, and it would help us on the supply side and perhaps the pricing side. It’s unclear on the pricing side... We’re evaluating all options,” Cook added.

According to earlier reports from the Financial Times and Bloomberg, Apple has been evaluating DRAM chips from Chinese memory maker ChangXin Memory Technologies (CXMT) for devices sold in China and has sought assurances from US officials that the company would not face future export restrictions.

CFO Kevan Parekh said memory inflation has become the single biggest driver of Apple’s margin pressure. He said more than the entire sequential decline in adjusted gross margin, from 48.1% in the June quarter to the midpoint of 46.5% expected in the September quarter, excluding tariff refunds, is explained by rising memory costs.

Despite those headwinds, Cook said Apple does not automatically pass higher component costs to consumers.

“It's not a mathematical formula,” he said. “We look at units, revenue, and margin, then come to a business judgment as to how to handle that. We think about it over the long term instead of a 90-day clock.”

Apple has already begun adjusting prices elsewhere in its portfolio. 

Earlier this month, the company increased prices for Macs, iPads, and the MacBook Neo as component costs surged, making the latest earnings call the clearest indication yet that memory inflation has become a structural challenge rather than a temporary spike.

The company nevertheless reported its strongest June quarter on record. 

Revenue rose 16% year-over-year to $109.4 billion, while diluted earnings per share increased 29% to $2.02. iPhone revenue climbed 22% to a record $54.3 billion, Mac revenue rose 29% to $10.4 billion, and Services revenue grew 12% to $30.7 billion. 

Apple also said its installed base surpassed 2.5 billion active devices, another all-time high. 

However, management forecast September-quarter revenue growth of 9–11%, below analyst expectations, citing worsening supply constraints and continued memory inflation.

Apple’s shares fell by as much as 6% during extended trading on July 30 amid lower revenue guidance. It had closed the session 1.41% lower after briefly touching the $5 trillion market cap earlier this week and surpassing NVIDIA to become the most valuable company.