Apple announced a record-breaking quarter on Thursday. However, outgoing CEO Tim Cook warned about upcoming problems: memory chip supply issues could impact business in the near future.
“Today Apple is proud to report our best March quarter ever, with revenue of $111.2 billion and double-digit growth across every geographic segment,” Cook said during Thursday’s earnings call. “iPhone achieved a March quarter revenue record, fueled by such extraordinary demand for the iPhone 17 lineup.”
Less positively, Cook shared that Apple spent more on memory chips in March than in previous quarters. The company managed to offset these costs by selling existing inventory. But, he warned, they expect “significantly higher memory costs” in June and beyond. These higher costs may “drive an increasing impact” on the business.
Cook was talking about what people are calling “RAMageddon.” This refers to how the AI industry is using up memory chips so quickly that it’s causing shortages. This pushes up hardware prices. Since Apple is mainly a hardware company, this isn’t good news for its core products.
Most notably, the chip shortage has affected the iPhone. Despite the strong sales Apple reported on Thursday, it has been previously noted that RAM costs have quadrupled. This impacts phone production costs and puts John Ternus, Apple’s incoming CEO, in a tough spot.
One possible outcome is that Apple might 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.
Ternus, who has been 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 certainly have a lot of work ahead when he starts the job on September 1. But he will still be able to rely on Cook’s supply chain experience for a while, as Cook will become executive chairman.
