Apple CEO Tim Cook addressed the escalating global memory shortage during the company’s Q1 2026 earnings call, revealing rising RAM and storage chip prices had minimal impact on December quarter margins but expects greater effects this quarter. Despite blockbuster revenue of $143.8 billion—up 16% year-over-year—and iPhone sales surging 23%, Cook noted the firm is exploring “a range of options” to counter significantly increasing market pricing.
Supply Chain Tactics
Apple’s purchasing teams are reportedly stationed near Samsung and SK Hynix factories in South Korea, aiming for 2-3 year contracts on LPDDR5X RAM for upcoming iPhones, though suppliers prefer quarterly deals betting on price hikes through 2027. Dell, Google, and Amazon executives are similarly camping out, as SK Hynix and Micron prioritize AI high-bandwidth memory, forcing Apple heavier reliance on Samsung. A 12GB module’s cost reportedly jumped 230% from $30 early 2025 to $70 by December, now comprising over 20% of smartphone production costs.
Financial Buffer
Services revenue hit a record $30 billion, up 14%, providing a cushion against costs, with gross margins guided at 48-49%. Apple secured DRAM supply only through H1 2026, with suppliers imposing 80-100% quarterly hikes for Q1, potentially raising iPhone 18 series expenses. Cook stayed vague on passing costs to consumers, citing iOS efficiency and strong demand exceeding expectations.
This saga underscores tech giants’ scramble in an AI-fueled chip crunch.
