Apple Warns Of 'Significantly Higher' Memory Costs Ahead; May Impact iPhone 18 Series Price

Apple delivered its strongest March quarter, but tempered the celebration with a stark warning - surging memory costs driven by the AI boom are expected to squeeze the company's finances throughout the rest of 2026, and the pressure is only going to grow.

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The AI memory crisis squeezing Apple's supply chain

'Significantly higher memory costs' is how Cook described what Apple is bracing for in the June quarter and beyond. He warned that after June, memory costs will 'drive an increasing impact' on Apple's business.

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The root cause lies in the AI boom. Chip makers including Samsung and SK Hynix are prioritising memory production for AI servers, snapped up by hyperscalers like Microsoft, Google, Meta, and Amazon, over consumer electronics. The result is a supply squeeze that has sent memory prices soaring. Taiwanese research firm TrendForce has estimated that conventional DRAM contract prices have jumped as much as 90 to 95 percent quarter over quarter, while NAND prices have risen as much as 55 to 60 percent. A February report from Counterpoint Research suggested DRAM prices jumped 80 percent to 90 percent in just the first six weeks of 2026 alone.

Cook noted that Apple has so far partially cushioned the blow by drawing down a stockpile of memory inventory the company had built up under more favourable pricing. But as that buffer runs out, Apple will increasingly be forced to buy at market rates. When asked how Apple plans to respond, Cook said the company is looking at 'a range of options' and is 'continuing to evaluate' the situation, declining to offer specifics.

Apple posts record earnings

Apple posted quarterly revenue of $111.2 billion for its fiscal second quarter ended March 28, a 17 percent jump year over year, blowing past analyst expectations of around $109.7 billion. Net income came in at $29.6 billion, or $2.01 per diluted share, a 22 percent increase from the same period a year ago, when the company earned $1.65 per diluted share on revenue of $95.4 billion.

CEO Tim Cook called it Apple's 'best March quarter ever,' citing double-digit growth across every geographic segment. iPhone revenue hit a new March quarter record, climbing 22 percent year over year, fueled by extraordinary demand for the iPhone 17 lineup. Services revenue reached yet another all-time high, coming in at approximately $31 billion, well ahead of analyst estimates of $30.4 billion. Mac revenue hit $8.4 billion, iPad revenue came in at $6.91 billion, and Wearables, Home and Accessories contributed $7.9 billion.

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Greater China was a particular standout, with March quarter revenue surging 28 percent to $20.5 billion, a quarterly record for the region, and part of a first-half growth rate of 33 percent there. Apple's CFO Kevan Parekh highlighted that operating cash flow exceeded $28 billion during the quarter, and that foreign exchange represented roughly a two-and-a-half percentage point tailwind. The company also authorised an additional $100 billion share buyback and raised its dividend 4 percent to $0.27 per share.

Despite the euphoria, Cook made clear the road ahead carries real headwinds. Apple expects revenue in the June quarter to grow between 14 percent and 17 percent year over year, ahead of analyst expectations of around 9.5 percent, but projected gross margins of 47.5 percent to 48.5 percent, a notable step down from the current quarter's 49.3 percent.

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