Apple CEO Tim Cook said overnight in an interview with The Wall Street Journal that the company will likely have to raise prices, especially for the iPhone, because the cost of key memory and storage chips has jumped sharply. He said Apple can no longer absorb the rising production costs, calling the situation a “once-in-a-century flood” and saying he had not seen price swings this extreme in 40 years in the industry.
The pressure comes from a global shortage of memory and storage components driven by massive artificial intelligence spending from Google, Microsoft, Amazon and Meta. Those companies are locking in chip supply through 3 to 5 year contracts with huge cash advances for the fast memory needed in AI servers. Apple, which is one of the world’s biggest memory customers, has avoided that model because of its more conservative spending approach, leaving it competing for limited supply on less favorable terms.
Chipmakers including Micron, SK Hynix and Samsung have seen their shares soar between 800% and 4,600% over the past year. Morgan Stanley estimates that even if producers expand capacity by 30% by 2027, there will still be a 15% shortfall in demand for consumer technology chips. Apple also needs more memory in its devices to support new AI features, including an updated Siri, which increases its dependence on the expensive market.
Cook said Apple is prepared to use its cash to help suppliers expand production, but rejected building its own chip factories, saying, “We know what we are good at.” He also called for a review of export limits to China and said “everything should be on the table” to secure supply. Apple did not say which products would get more expensive or when, but TechInsights estimates the next iPhone Pro could rise by about $270, and analysts expect smartphones and personal computers in the U.S. to become about 15% more expensive this year. Cook said, “We have to get memory and supply costs back to a sensible level for consumer products. That’s the bottom line.”
