Apple's inventory up 154% in a year as memory chip costs climb
Apple's inventory reached $14.54 billion at the end of its fiscal fourth quarter, and management expects memory costs to keep rising. The company forecasts a lower gross margin and blamed supply constraints for weak iPad sales.
US technology company Apple reported results for its fiscal fourth quarter, which ended in September, on Monday, November 2. They show the company continuing to stockpile inventory, mainly computer memory chips. This matters because memory prices are putting pressure on Apple's profit margin and could affect device prices.
Inventory and margin
Apple's inventory stood at $11.09 billion in the third quarter and rose to $14.54 billion in the fourth, an increase of 31.1%. Compared with the fourth quarter of 2025, when inventory was $5.72 billion, the rise is 154.3%.
Gross margin in the September quarter was 47.9%. For the December quarter the company forecasts 45% to 46%, a decline largely attributed to more expensive memory.
Management's explanation
Apple CEO John Ternus told analysts that current memory pricing is unprecedented. He said memory cost more in the September quarter than in June, though this was partly offset by carrying inventory and lower costs on certain other components.
Even higher memory costs are expected in the December quarter, and they are projected to keep increasing after that. Ternus acknowledged that the benefit from previously purchased inventory will shrink over time. Part of the cost will be covered by price increases made this year on some devices: Mac and iPad at the end of June, and iPhone in September.
To improve supply, Apple's manufacturing purchase obligations rose by $33 billion from June to the September quarter. COO Sabih Khan, who oversees supply chain and manufacturing, confirmed this but did not rule out further price increases for devices.
iPad sales
Apple cited supply constraints as the reason for weak iPad results. iPad revenue was $6.2 billion, against analyst expectations of $6.7 billion, and 10% lower than a year earlier. It was one of the few product segments that did not grow, while iPhone and Mac sales beat estimates.
