Storage crisis and geopolitical pressure: Apple's designated CEO John Ternus faces two crucial decisions that will shape the company for years to come.
With the change at the top of Apple, one question takes center stage: What issues will John Ternus tackle first? A new report from the Financial Times provides a clear answer. Two decisions are at the top of the list – and both have the potential to shape Apple's strategy for the coming years. These decisions concern the skyrocketing prices of memory and the question of where Apple will manufacture its products in the future.
Neither of these issues is routine. They force Ternus to take a stand early – towards investors, customers, suppliers, and, not least, the governments in Washington and Beijing. We have analyzed the report and explain why these decisions are so critical.
Storage prices have risen by over 400 percent
Apple has been accustomed to dictating terms in the memory market for years. That era is over, at least for now. The enormous demand for RAM for AI servers has catapulted prices upwards – with direct consequences for the material costs of an iPhone.
According to the Financial Times, until recently, memory accounted for roughly ten percent of the material costs of an iPhone. Next year, this share could rise to as much as 45 percent. This is not a minor shift, but a fundamental upheaval of the cost structure. BNP Paribas had previously cited the memory crisis as a key factor and raised its Apple price target to $300 – a clear indication that Wall Street had already priced this in.
For Ternus, this presents an uncomfortable choice. Either Apple absorbs the higher costs and accepts lower margins, or the company raises prices and risks selling fewer devices. Both options have strategic consequences, and both will trigger reactions.
There are already initial signs of how Apple might react. According to a report, Apple is lowering the specifications of some iPhone 18 models in the next generation to reduce costs. This suggests that Cupertino is not only adjusting the price, but also the hardware itself.
Manufacturing between China, India and the USA
The second major challenge is geopolitical. Ternus has to decide how Apple's production sites should be distributed between China, India, and the USA – and this in an environment where every decision carries political weight.
Tim Cook demonstrated diplomatic skill here. He managed to convince US President Trump that full iPhone production in the US was unrealistic, while simultaneously securing enough US investment to showcase political successes. It was a balancing act that Cook honed over years. You can find more about his tenure in our overview of Tim Cook's career as Apple CEO.
Apple has been walking a tightrope in China for some time. Beijing is sensitive to the increasing shift of iPhone assembly from China to India. As early as 2025, sources reported that China was deliberately trying to hinder production in India – through export restrictions, slower approval processes, and pressure on skilled workers.
Samik Chatterjee of JPMorgan sums it up perfectly: The central question for Ternus is how to position Apple on the right side of both Washington and Beijing. US investments will become one of the most important drivers of Apple's strategy in the coming years. These supply chain decisions will shape the company for many years to come.
What this means for Apple
What's interesting is that Tim Cook will remain on board as Executive Chairman. This suggests a division of roles that could be ideal for Apple: Cook will continue the delicate negotiations with Washington and Beijing, while Ternus will focus on products and long-term strategy. Cook will thus assume the role of political mediator, while Ternus will be free to concentrate on what defines Apple – top-tier hardware and software.
This division of responsibilities is anything but accidental. It suggests that Apple has planned the transition very deliberately. You can learn more about the personality and priorities of the designated CEO in our detailed overview of John Ternus' biography and career.
Nevertheless, the pressure remains high. The storage crisis will very likely be a major topic in Apple's Q2 2026 earnings call on April 30. Declining margins are unpopular with investors, and higher prices are unpopular with customers. Regardless of Ternus's decision, there will be headwinds.
What's next for Ternus
The coming months will show how Ternus handles these challenges. One thing is clear: he is taking the helm at a time when Apple must simultaneously make economic, technological, and geopolitical decisions. Storage prices, supply chains, and political relationships – everything is interconnected.
We've summarized exactly how Wall Street is reacting to the leadership change in a separate analysis: How Wall Street is reacting to Apple's CEO change. The first decisions that are now pending should reveal a lot about the style of the new Apple CEO. (Image: Shutterstock / NorthSky Films)
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