Apple reported a record March quarter on Thursday, posting revenue of $111.2 billion and double-digit growth across every geographic segment. Outgoing CEO Tim Cook called it the best March quarter ever, fueled by what he described as “extraordinary demand” for the iPhone 17 lineup. So far, so good - unless you’re the person who has to figure out how to keep making those iPhones when memory chips cost more than a small yacht.
Cook warned that Apple spent more on memory chips in March than in previous quarters, though the company managed to offset costs by selling stockpiled inventory. But the expectation, he said, is “significantly higher memory costs” in June and beyond, which may “drive an increasing impact” on the business. That impact, in plain English, is called “RAMageddon” - the delightful trend of the AI industry gobbling up memory chips with such enthusiasm that it’s causing shortages and driving up hardware prices. Apple, being primarily a hardware company, is not thrilled.
The chip shortage has already hit the iPhone hardest. Despite strong sales figures, RAM costs have reportedly quadrupled, impacting production costs and putting incoming CEO John Ternus in a less-than-enviable position. One possible result: Apple may increase iPhone prices. “There’s just a little less flexibility in the supply chain at the moment for getting more parts,” Cook told Reuters on Thursday, in what may be the understatement of the quarter.
Ternus, who has served as Apple’s senior vice president of hardware engineering, was on Thursday’s earnings call and praised Cook. “In my view, Tim is one of the greatest business leaders of all time. Stepping into the role of CEO is an incredible honor, and it means a great deal to me to have Tim’s trust and confidence,” Ternus said. He will obviously have his work cut out for him when he begins the job on September 1. But he will still have Cook’s supply chain experience to lean on for a while - Cook will become executive chairman, presumably to offer sage advice like “maybe buy more chips before they cost as much as a small country.”