Apple says memory prices are rising faster than it has ever seen, and the company is warning that the squeeze will cut into profit margins and limit Mac and iPad supply in the holiday quarter. The comments came during Apple's fiscal fourth-quarter earnings call on November 2, as reported by MacRumors.
CEO John Ternus told analysts that memory costs were higher in the September quarter and will be higher again in the December quarter, describing current pricing as "unprecedented." He said Apple expects memory purchase prices to keep climbing beyond December as well.
Apple has so far cushioned the blow. According to the call, the company offset September's higher costs by using memory it bought earlier at lower prices, along with cheaper pricing on some other components. It expects those same factors to cover part of the December increase, but Ternus cautioned that the benefit from pre-purchased memory will shrink over time.
The financial impact shows up in guidance. Apple expects gross margin of 45 to 46 percent in the December quarter, down from 47.9 percent in the September quarter. The company attributed the drop mainly to higher memory costs, with some additional costs tied to Siri AI.
Apple also said that Mac and iPad supply will be constrained in the December quarter because of memory issues. Its balance sheet reflects a push to secure components: inventory more than doubled from a year earlier to $14.5 billion, and manufacturing purchase obligations rose by $33 billion between June and the end of September. Ternus linked the obligations to improving supply and said the figure will appear in Apple's annual filing.
An analyst asked whether customers should expect further price increases after the hikes Apple made on iPads, Macs and iPhones in June and September. COO Sabih Khan took the question but did not answer it directly. CFO Kevan Parekh said the earlier increases were made "reluctantly" and that Apple is trying to balance the effect on customers against the effect on margins.
Apple did not announce any new pricing on the call, so whether prices rise again remains an open question. The company's guidance does suggest that memory, rather than demand, is the main constraint heading into the holiday season.
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