AI-driven memory chip shortage may force Apple to raise iPhone, Mac, iPad prices
Apple CEO Tim Cook has warned that upcoming products such as iPhones, Macs, and iPads could become more expensive due to a global shortage of memory chips driven by AI demand. Cook called the price increases 'unavoidable' after chip costs have quadrupled in the past year.
'RAMageddon' hits Apple
The surging demand for hardware driven by artificial intelligence has led to a global shortage of memory chips, a phenomenon dubbed 'RAMageddon'. Outgoing Apple CEO Tim Cook warned in an interview with The Wall Street Journal that the rising costs of memory and storage chips make price increases unavoidable. Chip costs have quadrupled since last year, and Cook described the situation as 'unsustainable'.
Which products will be affected?
Cook did not specify which products or when prices might rise, but he had previously raised alarms about the issue. In April, following record quarterly sales, he noted that higher costs could impact Apple's next business results. Incoming CEO John Ternus also warned about the problem that same month. Memory supply experts told the Financial Times that the iPhone is almost certain to be affected. Apple is expected to launch its next iPhone in September, providing an opportunity to announce price increases.
Impact on Apple's margins
Apple sells many devices containing DRAM and NAND chips, including the Apple Watch, Mac, iPad, and Apple Vision Pro. It's unclear how much more expensive these products will become. Research firm TechInsights estimated that Apple would need to add $270 to the next iPhone Pro to maintain its current profit margin. The iPhone 17 Pro currently starts at $1,099.
Apple's AI struggles
So far AI has not been a particular boon for Apple. The company is under pressure to define its AI strategy. Earlier this year, Apple paid a $250 million settlement to end a false advertising lawsuit over undelivered AI features. Its Worldwide Developers Conference in June showed progress, including an overhaul of Siri. However, more on-device AI processing means more memory requirements, a trajectory that likely ends with consumers paying higher prices.
