Apple is confronting what outgoing CEO Tim Cook calls a “hundred-year flood” in memory pricing, a surge driven by the generative AI boom that is straining supply chains and forcing the company to raise prices on Macs and iPads. The situation is tightening availability of advanced memory nodes needed for Apple’s A-Series and M-Series chips, which power iPhones and Macs, and is expected to worsen in coming quarters.
Strong Sales Meet Tightening Supply
Apple reported its “strongest June quarter ever,” with iPhone sales up 22% and Mac sales up 29% year over year, beating expectations. Despite that strength, the company is bracing for deeper memory shortages—often referred to as RAMageddon—that are already reducing supply chain flexibility. Cook said on the earnings call that demand remains high but supply constraints are growing, with “very significant constraints currently” and limited ability to fix them quickly.
Inventory Buildup Breaks With Cook’s Playbook
To cushion against shortages, Apple now holds $11.1 billion in inventory, nearly double the $5.7 billion reported last September. That marks a shift from Cook’s long-standing approach of minimizing on-hand inventory. The buildup reflects the company’s effort to secure components amid tight supply, especially advanced memory used in its silicon.
Price Increases Across Hardware Lines
Apple “reluctantly” raised prices on Macs and iPads last month, Cook said, citing unsustainable memory cost increases. The moves align with broader industry actions: Meta raised Quest 3 and Quest 3S prices, Samsung increased prices on Galaxy phones and tablets, Microsoft lifted prices across Surface Pro laptops, and Sony hiked PlayStation 5 prices again as memory chip costs surged. Industry forecasts point to RAM prices rising another 40–50% in Q3 2026 and about 30% more in Q4, as AI demand outpaces supply.
Guidance and Investor Reaction
For the next quarter, Apple projects revenue growth of 9% to 11% year over year, below the roughly 16% growth maintained in recent quarters. That slower outlook weighed on shares, with Apple stock falling 6% in after-hours trading following the earnings report. Cook noted that price increases were unavoidable because memory pricing has seen “exponential increases,” making the situation unsustainable without passing costs to customers.
Leadership Transition Amid Supply Stress
John Ternus, senior VP of hardware engineering, is set to become CEO in September. As he steps into the role, Apple faces a period of supply-side pressure, even as the company continues to “scramble on the supply side” to meet demand, Cook said.
Featured image credits: Wikimedia Commons
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