Core Summary

  • Apple said on its July 31 earnings call that supply constraints for advanced semiconductors, especially memory, are expected to intensify quarter by quarter.
  • CEO Tim Cook told investors that memory costs, crucial to all Apple devices, have continued to rise since the end of the December quarter and will keep climbing after the September quarter ends.
  • Cook said, "Looking beyond September, we see memory market prices continuing to rise, which could have an increasing impact on our business, and we are continuously evaluating."

In-Depth Analysis

Apple, likeother computer makers, is facing memory shortages due to surging demand for AI servers from enterprises and data centers. Rising memory costs have prompted Apple torecently raise product prices, and the supply crunch has also led Apple to reach a multi-year agreement withlong-time supplier Broadcomto jointly develop custom chips made in the U.S. for multiple generations of Apple products. The deal is estimated to be worth over $30 billion.

Cook said that in the last fiscal quarter, Apple's supply constraints mainly affected Macs, with less impact on iPhones and iPads. The limitations primarily stem from insufficient capacity in advanced process nodes used to produce Apple's system-on-chip (SoC).

"This is currently the main supply constraint, and its root is not an ordinary supply issue," Cook said. "Frankly, it is a demand forecasting problem—iPhone and Mac sales have far exceeded our expectations."

Despite lower-than-normal supply chain flexibility, Apple has been locking in supply ahead of time due to strong iPhone and Mac sales. Year to date, these two product lines have grown 22% and 29%, respectively.

"But at some point, this advance locking will reach its limit," Cook said. "Therefore, we will face considerable challenges on the supply side in the current quarter."

Part of the memory tightness stems from the fact that the DRAM market has only three major suppliers, Cook said. More suppliers might help ease supply pressure, but it is unclear whether they would lower prices.

Cook mentioned that Apple committed in 2025 to invest $600 billion in its U.S. supply chain over the next four years. The company also plans to reinvest tariff refunds into its supply chain network.

This year, Apple plans to open an advanced manufacturing center at its Houston facility, which is currently used to assemble AI servers. Cook said that later this year, Apple will alsoproduce Mac mini at that facility。