Because the generative AI increase drives steep demand for {hardware} parts, Apple and different {hardware} makers are going through what outgoing CEO Tim Prepare dinner calls “a hundred-year flood [on] reminiscence pricing,” which is severely impacting the price of producing iPhones, MacBooks, and different units.
Apple described its latest earnings report as its “strongest June quarter ever,” with iPhone and Mac gross sales performing higher than anticipated, rising 22% and 29%, respectively, year-over-year. But the corporate is bracing for reminiscence shortages, generally known as RAMageddon, to get even worse. Apple’s largest problem is securing the superior reminiscence nodes utilized in its Apple silicon chips, which energy the A-Collection and M-Collection processors utilized in iPhones and Macs.
“We proceed to count on excessive ranges of demand. Nevertheless, with much less flexibility in provide chain, we count on the influence from the availability constraints to extend considerably sequentially,” Prepare dinner mentioned on Apple’s quarterly earnings name. “We’re seeing some very vital constraints at present with restricted flexibility within the provide chain to treatment it.”
Apple is evidently apprehensive sufficient about provide shortages that it reported $11.1 billion in stock, practically double the $5.7 billion it reported final September. This marks a break from Prepare dinner’s long-held provide chain strategy, which has emphasised minimizing how a lot stock Apple has available.
These constraints led Apple to “reluctantly” increase the worth of Macs and iPads final month, Prepare dinner added. Different corporations which have raised {hardware} costs embrace Meta, Samsung, Microsoft, and Sony.
“We’re going to be scrambling on the availability aspect, basically,” Prepare dinner mentioned.
For the upcoming quarter, Apple is predicting income progress between 9% and 11% year-over-year. However within the final a number of quarters, Apple has maintained about 16% year-over-year progress. In fact, that worries traders — Apple inventory dropped 6% in after-hours buying and selling.
When Senior VP of {Hardware} Engineering John Ternus steps into the CEO position in September, the corporate might be going through a tough patch, however at the very least Apple isn’t alone in its provide struggles.
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