Apple CEO Tim Cook has informed The Wall Street Journal that price increases on Apple products are unavoidable, describing the current memory chip shortage as a "hundred-year flood." The demand from AI companies for high-bandwidth memory has quadrupled the cost of both DRAM and NAND chips since last year. This has squeezed consumer electronics manufacturers like Apple, who are now competing for supply against "hyperscalers" that are signing three-to-five year prepayment agreements. Morgan Stanley estimates that memory wafers available for consumer technology will fall up to 15% short of demand by 2027, as chipmakers redirect capacity towards AI customers.
To pass through current cost increases while maintaining Apple's profit margins, TechInsights calculates that approximately $270 would need to be added to the price of the next iPhone Pro model. While Apple's next major launch, the iPhone 18 lineup, is expected in September, price increases on Macs and iPads could be implemented sooner. Morgan Stanley also projects a 15% price increase across smartphones and PCs this year.
Cook stated that Apple is willing to deploy its balance sheet to help secure supply and called for a review of national security restrictions on Chinese memory suppliers. However, he ruled out building Apple's own memory factories. Memory chip makers such as Micron, SK Hynix, and Kioxia are directly benefiting from this surge in demand, with their shares reportedly increasing by 800% to 4,600% over the past year. Apple's efforts to secure supply, even with its substantial financial resources, are unlikely to match the long-term prepayment deals being made by AI hyperscalers.
