Apple CEO Tim Cook has confirmed that the company plans to raise prices on its products because the cost of memory chips has surged. Speaking to the Wall Street Journal, Cook stated that while Apple has tried to shield customers from these increases, the situation has become "unsustainable." This rise in costs is largely attributed to the exploding demand for memory chips from artificial intelligence (AI) companies, which has created a fierce competition for dwindling supplies.
The price of RAM has more than doubled since October 2025, and high-bandwidth memory (HBM), crucial for AI servers, has seen its cost quadruple since last year. This has led to a two-tiered market where consumer electronics manufacturers are competing against AI hyperscalers who are signing multi-year prepayment agreements for chip supply. Industry analysts at TechInsights estimate that, to maintain profit margins, passing on current cost increases would add approximately $270 to the price of the next iPhone Pro model, anticipated to launch in September 2026.
Cook, who is set to be replaced by John Ternus as CEO in September, highlighted that Apple is willing to use its balance sheet to secure supply but ruled out building its own memory chip factories. Morgan Stanley forecasts a 15% price increase across smartphones and PCs in the U.S. this year and predicts a 15% shortfall in memory wafers for consumer technology by 2027. While memory chip makers like Micron, SK Hynix, and Kioxia have seen their shares surge between 800% and 4,600% over the past year, the broader impact includes anticipated global smartphone price increases of around 20% in 2026, according to research firm Omdia.
This pricing reality is not unique to Apple, as other technology giants like Samsung have also warned of impending electronic device price increases due to chip shortages. Companies are either raising prices, cutting specifications, or delaying product launches to mitigate the impact. The war in Iran, which has disrupted helium supply essential for semiconductor manufacturing, has further exacerbated chip costs. The memory chip market overall is projected to grow to an $890 billion industry by the end of 2026, up significantly from $220 billion in 2025, underscoring the profound shift driven by AI demand.
