- Apple CEO Tim Cook says a global memory chip shortage is beginning to bite.
- The company expects memory costs to weigh more heavily on margins in the second quarter.
- "We do continue to see market pricing for memory increasing significantly," Cook said.
The global memory chip shortage is catching up with Apple, Tim Cook says.
The Apple CEO said on the company's first-quarter earnings call that Apple is beginning to feel the effects of the memory shortage crisis, with rising prices expected to put pressure on margins ahead.
The warning comes amid blockbuster demand for Apple's newest products. Customer response to the latest iPhone lineup "exceeded our expectations," with iPhone revenue jumping 23%, Cook said on the call Thursday.
Apple reported revenue of $143.76 billion and earnings per share of $2.84, beating analyst estimates.
The staggering iPhone demand left Apple exiting the December quarter with "very lean" inventory, pushing the company into what Cook described as "supply chase mode."
Cook said the biggest constraint is the limited access to advanced chipmaking nodes used to produce Apple's system-on-a-chip processors. Higher demand has also reduced flexibility across Apple's supply chain, he said.
Memory shortages played a minimal role in Apple's December-quarter margins, but their impact is expected to grow, Cook added.
The company expects memory costs to weigh more heavily on margins in the second quarter, contributing to its forecast gross margin range of 48% to 49%. Apple posted a gross margin of about 48% in the December quarter.
"We do continue to see market pricing for memory increasing significantly," Cook said. "As always, we'll look at a range of options to deal with that."
Apple's stock price rose about 2% after hours following the results on Thursday.
Rise of memory costs
Cook's comments come as the tech industry grapples with a worsening global shortage of memory chips.
AI companies, smartphone makers, and PC manufacturers are competing for the same pool of memory components, which are critical not just for consumer electronics but also for powering large language models and other AI systems. That surge in demand has sent prices climbing.
At CES 2026 last month, Jensen Huang, the CEO of Nvidia, described the memory storage market as "completely unserved."
"This market will likely be the largest storage market in the world, basically holding the working memory of the world's AIs," he said at CES with analysts.
"The amount of context memory, the amount of token memory that we process, KB cache we process, is now just way too high," he added, referring to AI storage needs.
The Korea Economic Daily reported in January that Samsung Electronics and SK Hynix are seeking server DRAM price hikes of 60% to 70% in the first quarter compared with the previous quarter. Market analysis firm Counterpoint also said last month that memory prices could climb as much as 40% through the second quarter of 2026.
"The memory market is at an unprecedented inflexion point, with demand materially outpacing supply," an analyst from global market intelligence firm International Data Corporation wrote in a December note.
The rapid buildout of AI infrastructure marks a break from the industry's traditional "boom-and-bust cycles."
"For consumers and enterprises alike, this signals the end of an era of cheap, abundant memory and storage, at least in the medium term," the analyst added.
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