Apple just reported its fourth quarter earnings, with revenue exceeding market expectations at $114.48 billion. But the good news was quickly overshadowed by the executives’ expectations for a rough go in the next quarter.

Apple executives shared in the company’s earnings call that they are expecting narrower profit margins driven largely by memory chip prices that continue to soar.

“What we’re seeing with memory pricing right now is unprecedented,” Apple’s freshly minted chief executive officer John Ternus said in what was his first earnings call as CEO. “Now, for the December quarter, we expect even higher memory costs, partly offset by a few factors.”

The global tech industry has been in the midst of a major supply crunch for high-bandwidth memory chips since last year. Faced by soaring demand from AI data centers, chipmakers have largely shifted their finite chipmaking capacity to address the needs of the AI industry, causing a lopsided supply crunch that has hit consumer electronics manufacturers. South Korean semiconductor giant SK Hynix recently shared that it expects the crisis to persist into the next decade.

Many consumer electronics manufacturers have had to pass these pressures onto consumers, particularly in the form of price hikes. In Apple’s case, the price hikes hit Macs and iPads earlier in the summer and iPhones back in September. On the call, Ternus said that those price hikes, as well as some carry-in inventory and lower costs of other non-memory components, would help offset some of the pressure from memory pricing increases, but won’t be enough to cover the full hit.

Source link