CEO John Ternus described current memory pricing as an unprecedented challenge during Monday’s earnings call. While Apple managed a 47.9% gross margin in the September quarter, it forecasts a drop to between 45% and 46% for the December period. To combat rising expenses, the company has already implemented price increases on Mac, iPad, and iPhone models earlier this year. However, executives signaled that the benefit of using cheaper, pre-purchased inventory is fading, forcing the company to commit an additional $33 billion in manufacturing purchase obligations to secure future supply.
In section Startups & Technology
Apple Scrambles as Memory Costs Threaten Margins
Apple’s inventory levels have surged by 154% year-over-year, hitting $14.54 billion as the company aggressively stockpiles memory chips. This massive accumulation reflects an urgent attempt to buffer against unprecedented price hikes, even as the tech giant warns that these costs will continue to climb through the end of the year.
Supply constraints also weighed heavily on the company's performance, specifically impacting the iPad segment. Revenue for the tablets reached $6.2 billion, missing analyst expectations of $6.7 billion and marking a 10% decline from the previous year. COO Sabih Khan, who oversees the global supply chain, confirmed the scale of these procurement efforts but declined to rule out further price adjustments for consumers if component costs continue their upward trajectory beyond December.
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