Tim Cook Warns of Memory Chip Pricing Crisis; Impact on Apple Margins
On his last earnings call before stepping down as CEO, Tim Cook warned that memory chip prices are experiencing a historic surge akin to a '100-year flood.' Prices for some memory chips have risen by up to 90% in the first quarter of 2026 due to high demand from tech companies and data centers. Apple has responded by raising device prices, including computers and upcoming iPhones, to offset margin pressures caused by these inflated costs. Apple's third-quarter gross margin was reported at 50%, partly boosted by tariff refunds. However, the company expects its fourth-quarter margins to fall between 47% and 48%. Management also anticipates slower iPhone sales growth due to potential supply constraints in memory chips for new models. Despite these challenges, Apple is leveraging its purchasing power and adjusting pricing strategies to maintain profitability. While Cook acknowledges ongoing margin pressures, the company remains optimistic about a recovery by late next year as demand stabilizes.
