Apple faces margin squeeze as AI-driven memory chip costs soar, prompting possible product price increases

Apple warns that rising memory-chip prices, driven by AI demand, threaten to reduce margins on flagship products like iPhones and Macs, with potential price hikes on upcoming models as supply chain costs escalate.

Apple is warning that a sharp rise in memory-chip costs is now affecting its business, with chief executive Tim Cook saying the market has seen a “hundred-year flood” in prices. According to MacRumors and industry reports, Cook told investors that the surge in RAM and storage costs had only a modest effect on Apple’s gross margin in the last quarter of 2025, but that the pressure would be greater in the current period. Apple remains highly profitable, having posted record quarterly revenue of $143.8 billion, but the company is now openly assessing ways to manage a more expensive supply chain over the longer term.

The price shock is being driven largely by demand from artificial intelligence infrastructure, which has tightened supply of NAND flash and DRAM chips. SanDisk focuses on NAND, while Micron makes both NAND and DRAM, making both companies direct beneficiaries of the squeeze. For Apple, by contrast, the higher component bill threatens margins on products that rely heavily on memory and storage, including iPhones, iPads and Macs.

By June, Cook was signalling that price increases on some Apple products were unavoidable. Reports from MacRumors, Tom’s Hardware and ITPro said Apple could no longer absorb the full rise in costs, although Cook did not specify which models would be affected or how much prices might rise. The iPhone 18 Pro range, due later this year, has been mentioned as a possible candidate for higher pricing, but Apple has not confirmed any product-specific changes.

The pressure is not confined to Apple. Reuters has reported that Amazon raised its 2026 capital-expenditure forecast from $200 billion to $220 billion, citing higher memory-chip costs. That suggests the same supply squeeze is spreading across AI-heavy data-centre operators as well as consumer-electronics makers. If prices remain elevated, some analysts expect the benefit to continue flowing to memory suppliers into 2027, while customers such as Apple may have to choose between thinner margins and higher retail prices.