Apple warns of 'unprecedented' rise in memory chip prices

A customer holds the newly launched iPhone Duo at the Apple store on Fifth Avenue in New York last month. Photograph: Ryan Murphy/AP

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A customer holds the newly launched iPhone Duo at the Apple store on Fifth Avenue in New York last month. Photograph: Ryan Murphy/AP

Apple

Apple warns of ‘unprecedented’ rise in memory chip prices

iPhone maker says decision to raise prices has offset some of impact, as revenues are stronger than expected

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Apple has warned of an “unprecedented” rise in memory chip prices, as it battles with datacentres to lay its hands on supplies.

The iPhone maker’s shares fell in after-hours trading after it told investors that the higher prices will eat into its profit margins.

“What we’re seeing with memory pricing right now is unprecedented,” John Ternus, Apple’s new chief executive, told a conference call on Monday, predicting that memory costs in the fourth quarter of this year would be even higher than in the previous three months.

Ternus said Apple’s decision to raise iPad and MacBook prices in June, followed by iPhone prices in September, had “provided some offset” for the company.

Ben Barringer, the head of technology research at Quilter Cheviot, said Apple’s results were “OK, if on the disappointing side”.

“Revenues were up 12%, driven primarily by iPhone sales and strong sales of Mac Mini, which users can use to apply agentic AI. China growth was robust which is pleasing to see, while iPad and wearables disappointed with services growing but lower than the group average at 10%,” he added.

“There appears to be a lot of interest in the iPhone Duo, but it is early days yet with the product not yet on full release, but it is hoped that can help drive the next leg of Apple’s product innovation.”

Apple’s shares were down 2.75% in after-hours trading on Wall Street.

Apple posted stronger-than-expected revenue in the fiscal third quarter, giving Ternus an upbeat start to his tenure, which began in September. The solid results bucked a downward trend for tech companies this quarter, as companies including Alphabet, Amazon and Intel had disappointing quarterly results.

Jacob Bourne, an Emarketer analyst, said record iPhone revenue and strong growth in China demonstrated the resilience of Apple’s business.

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Revenue rose 12% to $114.5bn from $102.5bn.

Analysts, on average, were expecting earnings of $1.99 a share on revenue of $113.4bn, according to a poll by FactSet.

While its rivals are facing investor uncertainty over huge investments in artificial intelligence, Bourne said Apple’s “tepid approach” to AI infrastructure spending had helped preserve its cashflow – while partnerships with companies such as Alphabet could help the iPhone maker strengthen its AI capabilities without taking on the same financial risks as its peers.