Apple is facing a situation it hasn't seen in a long time. Soaring prices for memory chips are putting the company under pressure and raising the question of whether Apple will absorb these additional costs itself or pass them on to customers. During the recent earnings call, Apple CEO Tim Cook left this very question unanswered. This is noteworthy, as Apple has typically denied price increases in the past or addressed them early on.
Apple is known for strict cost control, high margins, and a strong negotiating position with suppliers. The company usually manages to absorb rising component prices. However, the current boom in artificial intelligence is fundamentally changing the memory chip market. Demand for RAM and flash memory is exploding, and even Apple cannot escape this trend.
Tim Cook does not rule out price increases
During the conference call, several analysts raised questions about the sharply increased memory prices. One analyst directly addressed the issue of price increases, pointing out that Apple had historically only made price changes in response to currency fluctuations. The question aimed to determine whether, given the "unprecedented developments" in memory prices, price adjustments could now also be considered.
Tim Cook's response was brief. He stated that he didn't want to speculate on the matter. For observers, this statement is more than just a diplomatic platitude. Cook is known for avoiding questions about the future. Had Apple categorically ruled out price increases, this would have been the moment to clarify. The fact that this didn't happen leaves room for interpretation.
Why cost increases are hitting Apple particularly hard
Apple is known for its rigorous profit margin protection. In many cases, the company leverages its market power to secure low prices from suppliers. However, the current memory chip market operates under different rules. The rapid expansion of AI data centers is driving extreme demand for DRAM and NAND memory.
Analysts quoted by the Wall Street Journal are speaking of an extraordinary price increase. Sravan Kundojjala of the research firm SemiAnalysis says Apple is definitely under pressure. Mike Howard of TechInsights even calls the development unprecedented.
TechInsights estimates that the price of DRAM will quadruple by the end of this year compared to 2023. The cost of NAND flash memory is expected to more than triple over the same period. These figures illustrate that this is not a case of short-term fluctuations, but rather a structural shift in the market.
Specific consequences for the iPhone
Rising storage prices are directly impacting Apple's most important product line. Mike Howard estimates that Apple could pay around $57 more for the two storage options alone in the base model of the iPhone 18, which is expected to be released this fall, compared to the base model of the iPhone 17.
- For comparison: The iPhone 17 starts at a price of $799 or €949 in Germany. A cost increase of this magnitude represents a significant portion of the manufacturing costs. Even for Apple, this makes it more difficult to fully offset the higher expenses internally without adjusting other aspects of the product.
Apple under increasing cost pressure
Apple finds itself in an unusual situation. The sharply rising prices for memory chips are hitting even a company with enormous market power and experience in cost management. Tim Cook's refusal to rule out price increases underscores the seriousness of the situation. Whether Apple will absorb the additional costs itself or pass them on in the form of higher prices remains to be seen. What is clear, however, is that the pressure on Apple is mounting and its existing strategies are no longer automatically sufficient. (Image: Shutterstock / umitc)
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