Apple Warns of Further Memory Chip Price Hikes

According to Apple, memory chip market conditions have reached unprecedented levels, with prices continuing to climb and further increases expected in the coming quarters. During its earnings conference call on November 2, CEO Tim Cook warned that rising memory costs could put additional pressure on the company's operating expenses, revenue growth, and gross margins.

Apple relies on major memory chip manufacturers, including Samsung Electronics, SK Hynix, Micron Technology, and Kioxia. However, hardware teardowns have also revealed the use of memory products from Taiwan-based manufacturers Winbond Electronics and Nanya Technology. Apple's latest comments on the memory market have drawn attention to the growing importance of these companies amid tightening supply and rising prices.

Apple expects its gross margin to range between 45% and 46% in the current quarter, below analysts' expectations and down from 47.9% in the previous quarter. Following the announcement, Apple's shares fell more than 3% in early trading on November 3, while Micron shares gained more than 4%.

Cook described the current memory market as unprecedented, noting that memory prices were higher in the previous quarter than in the quarter before. Manufacturers are facing significantly higher costs, putting pressure on product pricing and profitability. Apple has managed to offset part of this impact through inventory benefits and lower costs for certain non-memory components, but these measures have not fully eliminated the financial pressure.

The supply situation has also become more challenging compared with June. According to Cook, rising memory prices are creating an increasingly significant cost burden, and the company expects this pressure to intensify in the near term.

Looking ahead, Apple anticipates further memory price increases in the current quarter, with prices potentially continuing to rise into next year. To manage the situation, the company is considering product price adjustments, securing inventory earlier, and reducing costs across other components.

Apple's inventory reached $14.54 billion at the end of September, representing a 154% increase year over year. Meanwhile, its manufacturing purchase commitments increased by $33 billion compared with the end of June, highlighting the company's efforts to secure component supplies amid ongoing cost pressures.