Apple fans brace for higher prices as AI sends chip costs soaring, says Cook
Apple customers may soon have to dig a bit deeper into their wallets after CEO Tim Cook warned that rising costs for memory and storage chips are becoming too much for the company to absorb.
Shopper outside the Fifth Avenue Apple store in New York. Michael Nagle/Bloomberg via Getty Images
Apple customers may soon have to dig a bit deeper into their wallets after CEO Tim Cook warned that rising costs for memory and storage chips are becoming too much for the company to absorb.
- Apple says rising memory and storage chip costs could force product price increases.
- CEO Tim Cook says Apple has tried to shield customers, but the cost pressure has become unsustainable.
- The warning shows how the AI data center boom is pushing up prices for the devices consumers buy every day.
Key Takeaways by nexos.ai, reviewed by Cybernews staff.
Cook told The Wall Street Journal (WSJ) in an interview on Tuesday that the eventual price increase would be “unavoidable.”
“We’re doing our best to mitigate the huge increases that are being passed to us, and we’ve been trying to shield our customers from the increases, but the situation has become unsustainable,” he said.
AI boom squeezes chip supply
According to the newspaper, the soaring chip costs mainly stem from increased demand for key components used to build AI infrastructure in consumer devices, all part of the AI boom blanketing almost every industry sector.
When demand is high and supply is low, the market takes its course, leaving major tech companies no choice but to fork over the money to cover the higher price tag.
Industry groups representing automakers, retailers, electronics manufacturers, and other sectors warned earlier this month that growing demand for memory chips could lead to higher prices for a range of consumer goods while disrupting supply chains.
Cook said Apple is feeling particular pressure in the DRAM (Dynamic Random-Access Memory) and NAND Flash memory markets, critical components used in everything from smartphones, tablets, and laptops to computer servers, automobiles, and even medical equipment.
The difference between the two, described as powering a smartphone with DRAM used for running apps and NAND used for storing photos and videos.
The CEO noted that more memory supply is being redirected toward high-bandwidth memory, a specialized technology used in AI servers.
"There's less supply at a time when consumers want devices and the memory guys are passing along huge price increases," Cook said.
"We definitely need memory pricing and supply to return to reasonable levels for consumer products."
Next Apple product launch could face price pressure
Cook did not say when prices could increase, how large the increases might be, or which Apple products could be affected, although the comments come as the company prepares for a major product launch this fall.
Earlier this year, financial giant Morgan Stanley predicted a 15% spike in smartphone and computer prices, the Journal said, citing a chart showing the dramatic rise in memory chip prices.
Apple is widely expected to unveil its first foldable iPhone alongside the upgraded iPhone 18 Pro and Pro Max in September.
The tech company, which has historically used its scale and supply chain leverage to protect customers from component price spikes, is also feeling the squeeze after announcing a planned reboot of Siri, which will require "additional DRAM to support more AI features," the news outlet said.
Cook hinted that Apple is open to using its massive cash reserves to help expand memory production capacity. However, he offered few details on how that might work.
"We're willing to use our balance sheet to help be a part of the solution. Obviously, more capacity is needed," he said.
Has your password leaked?
Unlock more exclusive Cybernews content on YouTube.