Apple will increase the prices of its smartphones, according to the company’s CEO, Tim Cook, in an interview with The Wall Street Journal. The reason is simple: there has been a drastic increase in spending on storage and memory components, which is primarily due to the race in artificial intelligence (AI).
“Unfortunately, price increases are inevitable,” Cook told the WSJ. He added, explaining the technology company’s difficulties: “We are doing our best to mitigate the huge adjustments that are being passed on to us and we are trying to protect our customers, but the situation has become unsustainable.”
The mass targeting of storage and memory chips (DRAM) to equip artificial intelligence servers has generated an imbalance in the market. This migration of inputs has caused costs to quadruple since last year, driven by heavy investments from companies such as Meta, Amazon, Google and Microsoft.
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According to projections published by the WSJ, this increasing trend is expected to continue until 2027. The expectation is that the financial transfer of these costs should increase the value of the next iPhone Pro by up to US$270, something unprecedented until then.
The current shortage stems from semiconductor manufacturers prioritizing demands from the artificial intelligence sector. A study by the Morgan Stanley bank cited by the WSJ points out that, even though the manufacturing capacity of silicon disks for RAM memory is expected to increase by 30% by 2027, the volume aimed at commercial electronics will be up to 15% below what the market needs.
In addition, entities from the automotive, retail and technology industries sent a formal appeal to US government secretaries warning about the risks of shortages and widespread increases in the price of everyday products, according to information from Reuters.
The current situation has forced price changes on products from competitors such as Nintendo, Dell and Hewlett-Packard, according to the report. The WSJ also mentioned estimates from Morgan Stanley indicating that computers and cell phones could become 15% more expensive in the United States later this year.
In the specific case of Apple, the situation clashes with the historical dependence on charging higher margins for internal space upgrades and the need for more memory to run local artificial intelligence systems, such as the new Siri.
Tim Cook did not set any type of financial goal or even dates for the changes, but Apple’s calendar predicts the arrival of the iPhone 18 family and a version with a flexible screen for September, during which time he will also hand over executive command to John Ternus, according to a Reuters report. Specific changes have already been recorded previously, such as the readjustment applied to the Mac Mini last month, noted the WSJ.
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Cook stated in the interview that he has never witnessed such volatility in values in more than four decades of experience in the supply sector, defining the recent moment as “this is a flood of historic proportions”.
The executive detailed that the bottleneck is especially concentrated in the DRAM segment due to the production focus on high-bandwidth memories (HBM), telling the vehicle: “There is less supply at a time when consumers want devices, and memory manufacturers are passing on gigantic price increases.”
“We definitely need memory prices and supply to return to reasonable levels for consumer products. That’s the core issue,” Cook told the WSJ.
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To try to overcome the supply crisis, Cook stated that the company is considering mobilizing the company’s own balance sheet to secure supply contracts. However, as detailed by the WSJ, large cloud corporations have been signing long-term contracts with billion-dollar advances, a model that challenges Apple’s traditional spending moderation.
The CEO ruled out the possibility of building industrial complexes specifically for chips: “We can’t do everything,” he explained, concluding that “We know what we’re good at.”
Cook was questioned by the report about the feasibility of using Chinese suppliers, which are emerging in the sector but come up against United States national security barriers. He defended a stance of open trade. “I think everything needs to be on the table”, highlighting that “I think we should look at all sources of supply.”
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Meanwhile, the main holders of this technology, such as Micron, SK Hynix, Samsung, Kioxia and Sandisk, experienced significant share valuations in the last year, with jumps ranging from 800% to 4,600% in the wake of inflated profits by the corporate market.
