Apple warns memory costs will keep rising as Macs and iPads run short this holiday

Apple has just finished the best year in its history, and it spent its earnings call explaining why the next one will cost more to build. The memory chips inside every iPhone, Mac and iPad have become so expensive that Apple’s chief executive called the pricing unprecedented, and the company told analysts it expects those costs to keep rising beyond the holidays.

For shoppers, the warning lands in two places. Apple has already raised prices across much of its lineup to absorb the cost, and it now expects Macs and iPads to stay hard to find through the holiday season because it cannot get enough memory. The same chips are being bought up by the companies racing to build artificial-intelligence data centers, and even the world’s most valuable phone maker is now bidding against them.

A record year with a weaker margin

The headline numbers were strong. Revenue for the fiscal fourth quarter reached $114.5 billion, up 12% from a year earlier, and full-year sales hit a record $478.8 billion, according to Apple’s earnings release. iPhone revenue rose 17% to $57.6 billion, and the Mac grew 24%, the fastest of any product line. It was the first quarterly report led by John Ternus, who succeeded Tim Cook as chief executive.

The margin is where the strain shows. Gross margin was 47.9%, but chief financial officer Kevan Parekh said about one percentage point of that came from one-off tariff refunds. Without them, margin would have slipped by roughly a point from the previous quarter, mainly because of memory. For the current quarter Apple guided to 45% to 46%, below the 46.3% analysts polled by LSEG had expected, citing higher memory costs and the expense of running its new Siri AI service.

Apple has passed part of the bill to customers. It raised prices on Macs and iPads first and then on iPhones, adding $100 to iPhone prices, as CNBC reported, a decision Ternus described as reluctant. Executives said it is too early to tell whether higher prices are costing sales, and pointed to installment plans such as the Apple Upgrade Program as the way to keep devices affordable.

Memory replaces tariffs as the cost that matters

Unlike tariffs, which applied to goods entering the US, memory costs hit every market Apple sells in, from Europe to India and Latin America. To lock in supply, Apple’s manufacturing purchase obligations rose by $33 billion in a single quarter, a commitment Parekh said will appear in the company’s annual filing. An analyst on the call noted that Apple now competes for memory with deep-pocketed buyers signing long-term contracts, and that laptop prices across the industry have been climbing too.

Not everyone thinks Apple’s scale will protect it for long. Barclays, which rates the stock underweight, wrote before the results that the pricing advantage Apple has enjoyed from its size and preferential memory deals is fading. Services, the company’s most profitable business, grew less than 10%, its slowest pace since 2022 according to CNBC, and Apple expects only 8% to 9% growth this quarter. Its foldable iPhone Duo remains supply-constrained, with no date for when supply will meet demand, and iPad sales fell 10%. Shares fell almost 3% in after-hours trading.

Apple expects revenue in the December quarter to grow between 7% and 10%, which it said would be the biggest quarter in its history, with Mac and iPad supply still constrained by memory. Its annual report is due on November 3, and a quarterly dividend of $0.27 a share is payable on November 16.

The chip nobody looks at when buying a laptop is now the one deciding what it costs, and whether it is on the shelf at all.

Tags: Apple, iPhone, John Ternus, Mac, memory chips, quarterly earnings