Apple is facing mounting pressure from the global memory chip shortage, with CEO Tim Cook warning that rising memory costs will significantly impact the company’s profit margins in the coming quarters. During Apple’s first-quarter earnings call, Cook revealed that the tech giant is beginning to feel the effects of a memory crisis driven largely by surging AI infrastructure demand.
Despite reporting blockbuster results with $143.76 billion in revenue and earnings per share of $2.84 that beat analyst estimates, Apple is confronting supply constraints that threaten future profitability. iPhone revenue jumped 23% as customer response to the latest lineup “exceeded expectations,” leaving Apple with “very lean” inventory and pushing the company into what Cook described as “supply chase mode.”
The memory shortage stems from intense competition between AI companies, smartphone makers, and PC manufacturers for the same pool of memory components. These chips are critical not only for consumer electronics but also for powering large language models and other AI systems. Cook identified limited access to advanced chipmaking nodes for Apple’s system-on-a-chip processors as the biggest constraint, with reduced supply chain flexibility compounding the problem.
While memory shortages played a minimal role in Apple’s December-quarter margins, Cook warned their impact will grow significantly in the second quarter, contributing to a forecast gross margin range of 48% to 49%. “We do continue to see market pricing for memory increasing significantly,” Cook stated. “As always, we’ll look at a range of options to deal with that.”
The crisis extends industry-wide. Nvidia CEO Jensen Huang described the memory storage market as “completely unserved” at CES 2026, noting that AI storage needs have exploded. “This market will likely be the largest storage market in the world, basically holding the working memory of the world’s AIs,” Huang explained, referencing the massive context memory and token memory requirements for AI processing.
Memory prices are skyrocketing: Samsung Electronics and SK Hynix are reportedly seeking server DRAM price hikes of 60% to 70% in the first quarter, while market analysis firm Counterpoint projects memory prices could climb as much as 40% through Q2 2026. An International Data Corporation analyst noted that “the memory market is at an unprecedented inflexion point, with demand materially outpacing supply,” marking a departure from traditional boom-and-bust cycles due to rapid AI infrastructure buildout.
Key Quotes
We do continue to see market pricing for memory increasing significantly. As always, we’ll look at a range of options to deal with that.
Apple CEO Tim Cook addressed the memory cost crisis during the company’s earnings call, acknowledging the significant pricing pressure while suggesting Apple will explore various strategies to mitigate the impact on its business.
This market will likely be the largest storage market in the world, basically holding the working memory of the world’s AIs.
Nvidia CEO Jensen Huang described the memory storage market as “completely unserved” at CES 2026, emphasizing how AI systems’ massive memory requirements are creating unprecedented demand that’s transforming the semiconductor industry.
The memory market is at an unprecedented inflexion point, with demand materially outpacing supply.
An analyst from International Data Corporation highlighted the severity of the shortage, noting that the rapid AI infrastructure buildout has broken traditional industry cycles and signals “the end of an era of cheap, abundant memory and storage.”
Our Take
The memory chip shortage affecting Apple reveals a critical bottleneck in the AI revolution that many industry observers predicted but few fully appreciated. AI’s transformation from experimental technology to essential infrastructure is happening faster than supply chains can adapt. What’s particularly significant is that this isn’t a temporary spike—the sustained demand from AI workloads represents a structural shift in semiconductor consumption patterns.
Apple’s warning should serve as a canary in the coal mine for the broader tech industry. If memory constraints are forcing even the most profitable tech company to adjust margin expectations, smaller players will face existential challenges. This could consolidate power among well-capitalized AI companies while potentially slowing innovation from startups. The industry may need to fundamentally rethink memory architecture and explore alternative technologies to meet AI’s insatiable appetite for computational resources.
Why This Matters
This development signals a fundamental shift in the semiconductor industry driven by artificial intelligence’s voracious appetite for memory resources. When even Apple—one of the world’s most powerful tech companies with immense purchasing power—struggles with memory supply constraints, it underscores how AI infrastructure demands are reshaping global technology supply chains.
The memory shortage represents more than a temporary supply-demand imbalance; it reflects the massive scale of AI deployment happening across the industry. As companies race to build data centers and deploy large language models, they’re consuming memory chips at unprecedented rates, creating sustained pressure that analysts believe will persist for years.
For businesses and consumers, this means higher prices for devices and AI services as companies pass increased component costs downstream. The shortage could also slow AI innovation if startups and smaller companies struggle to access necessary hardware. More broadly, this crisis highlights the strategic importance of semiconductor manufacturing capacity and may accelerate efforts to expand chip production globally, with significant implications for technology independence and national security policies worldwide.
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Source: https://www.businessinsider.com/memory-chip-shortage-apple-earnings-first-quarter-tim-cook-2026-1