Apple says the cost of memory chips is still going up and will hurt it more in the December quarter than it did in the last one. On its earnings call on 2 November, CEO John Ternus called current memory pricing “unprecedented”, and the company’s finance and operations chiefs would not rule out another round of price rises on iPhones, iPads and Macs.
Apple expects its gross margin to fall from 47.9% to between 45% and 46% in the December quarter. Memory is the main reason, with the cost of running the new Siri AI adding some pressure.
The numbers behind that warning came with the quarter ended 26 September. Apple’s results release shows revenue of $114.5 billion, up 12% on last year, with a September-quarter record for iPhone. Apple said the 47.9% margin included roughly one percentage point from tariff refunds, so the underlying figure was lower.
Stockpiled chips are running down
Ternus said Apple absorbed higher memory costs in the September quarter partly by using chips it had bought earlier at lower prices, and by paying less for some other components. That cushion shrinks over time, he said, and he expects memory purchase prices to keep rising beyond December. Apple also raised prices on Macs and iPads at the end of June and on iPhones in September, and those increases are meant to cover part of the December gap.
Apple is buying ahead. Its inventory reached $14.5 billion, against $5.7 billion a year earlier, and Ternus said its manufacturing purchase commitments rose by $33 billion between June and September. MacRumors’ coverage of the call adds that Mac and iPad supply will stay tight in December because of memory.
No answer on the next price rise
An analyst asked directly whether prices could rise again. COO Sabih Khan took the question and gave no yes or no. CFO Kevan Parekh said earlier increases were made “reluctantly” and that Apple is weighing short-term and long-term effects on each product.
The strain shows in the iPad line. Apple’s iPad revenue fell about 10% from a year earlier to $6.2 billion, and the company blamed supply limits. iPhone and Mac revenue both grew.
Apple’s executives gave no sign that the price rises already made would be reversed. The next quarterly report will show how much of the memory cost Apple managed to pass on.
