Tim Cook Says Apple Price Increases Are 'Unavoidable' Due to Memory Costs

[mwhite]

Apple is raising its prices to offset the high cost of memory and storage, CEO Tim Cook told The Wall Street Journal. Apple is no longer able to absorb the increased prices and will need to pass some of the cost on to consumers.

"Unfortunately, price increases are unavoidable," said Cook. "We're doing our best to mitigate the huge increases that are being passed to us, and we've been trying to shield our customers from the increases, but the situation has become unsustainable."

Cook did not say which products will get price increases or how much pricing will go up. The iPhone 18 Pro and iPhone 18 Pro Max coming in September could be more expensive than the iPhone 17 Pro and iPhone 17 Pro Max. Prices on iPads and Macs could go up in the near future.

Apple already raised the price of the Mac mini from $599 to $799 by eliminating its lowest-tier model. Apple has also eliminated several higher-tier Mac mini and Mac Studio options.

Growing demand for memory and storage chips from AI companies has led to chip shortages and higher costs. The Wall Street Journal suggests Apple will need to increase device costs "substantially" to maintain its current profit margins given the cost of memory chips and SSDs. Research firm TechInsights claims Apple will need to make the iPhone 18 Pro around $270 more expensive to keep its existing profit margin.

Apple is struggling more with memory chips, but storage chips are also an issue. "There's less supply at a time when consumers want devices and the memory guys are passing along huge price increases," Cook told The Wall Street Journal. Cook said Apple will use its cash to increase memory supply, but he did not give details on what that means.

Apple does not plan to create its own memory and storage factories. "We can't do everything," Cook said. "We know what we're good at."

While memory chip makers like Samsung, SK Hynix, and Micron are increasing production capacity, much of that added capacity will prioritize server chips. Demand for consumer-device chips is expected to continue to outpace supply. At the same time, Apple needs to increase the DRAM in its devices to support new AI features. Cook likened the memory shortages to a hundred-year flood. "I've never seen anything like it in any area in over 40 years," he said.

Apple is one of the largest purchasers of memory and storage worldwide, but it is likely reluctant to make the same deals AI companies do. Those deals involve signing multi-year agreements with a large cash prepayment.

Multiple companies have already raised their prices, including Samsung, Microsoft, Sony, and Dell.


Article Link: Tim Cook Says Apple Price Increases Are 'Unavoidable' Due to Memory Costs

Damn. Now it makes me wish I had ordered a 24/512 Mac mini instead of a 16/512 Mac mini, which I just picked up last week.

 

[Happy_John]

Why take the chance? They could afford to lose a billion on a new plant, that's ALL THEIRS, They wouldn't have to worry about the future, whatever the industry does would be only affect other companies. Apple's lines would be secure from market needs, THEY would control the line. Now they are open to market instability.

Again, building and running a fab is neither quick nor easy. If it were, every tech hardware company would have gone down that road.

As it is, it's neither conspiracy nor accident why there are literally only a handful of high-end chip fab companies, and why TMSC dominates that industry sector.

To put it another way, there's a reason why people generally don't do their own dentistry, even if you tell them it would be cheaper and secure from market changes in dentistry charges if they did.

 

[LFO8]

Yes, but that doesn't mean the "supply chain issues" weren't real.

It just means companies were opportunistic after the fact, and that it's human nature to quickly adapt and accept a price increase or any other negative change on their life as a "new normal".

Ens**tifcation is effective because, after a relatively short period of outrage and complaining, people mentally shrug their shoulders and accept higher prices for a worse product / service.

Yes the supply chain issues were real during the pandemic. Never implied otherwise. What I was trying to get at is the malignant greed of companies to raise prices for any reason only to never have them come back down again ever. Only causing more inflation that they then can’t wait to complain about when said inflation causes to raise workers pay so they can still afford to live.

 

[Happy_John]

Yes the supply chain issues were real during the pandemic. Never implied otherwise. What I was trying to get at is the malignant greed of companies to raise prices for any reason only to never have them come back down again ever. Only causing more inflation that they then can’t wait to complain about when said inflation causes to raise workers pay so they can still afford to live.

That's literally what corporations do. They milk. That's their purpose.

Rather than blaming corporations, I'd direct my ire towards government and public representatives.

After all, corporations exist to benefit the interests of their shareholders, governments exist to benefit the electorate / general public. It's why they are called "public servants" and "representatives". Their mandate is to work for the public.

 

[cubbie5150]

I'm a bit of a dinosaur who's still using an iPhone SE (2nd Gen, I think...released 2020?? but purchased July 2021) and a 16" M1 Pro MBP.

My phone needs are very minimal compared to the average Macrumors poster, I presume. Still, and maybe I'm succumbing to hope'ium, but I just might go ahead and get a 17 Pro just in the hopes it'll last me for a *very* long time. I've been dragging my feet about buying a new phone the past 6+ months, maybe now is the time.

 

[Wanted797]

Not surprising. I’ve been telling people if they want a Mac with a higher memory capacity to buy now before prices go up.

My guess is that Tim Cook is doing this as cover for John Ternus so that he doesn’t look like the “bad guy” at his first major product announcement as CEO raising prices. Cook described the increase in demand for RAM as a “100-year flood.”

You assume the ram price will come back down? 🤣

 

[Mackan]

Unsustainable as in instead of making 54 billion in profit, they only make 44? And shareholder price go down?

Meanwhile, our planet is becoming uninhabitable due to this behavior.

 

[silk rabbit]

Love apple but they are the greediest of the greedy...take your Irish 137 $$$$$billion and pay your taxes and act like a responsible tax paying AMERICAN COMPANY DAMNIT

 

[thettareddast]

But they won't, and only because of greed. They expect to make the same profit, or more, each year. Apple is not there for the customer...they are there for the shareholder.

Please tell me on a scale of 0-10 how difficult this concept is to grasp:

Without customers, there are no shareholders.

That a company attracts shareholders is ipso facto a signal that people think the company does the right thing to attract customers.

No investor would put money into a business it thinks makes bad products that draw no customers. Because it will not earn money. Because customers are greedy and (rightly) want to get the maximum value for their spending.

 

[iHorseHead]

There is actually a simple solution: everyone stops using LLM's. Then AI companies will collapse and the memory and storage situation will improve in no time.

Never gonna happen seeing how much pointless AI slop there's on instagram and Youtube. People aren't even using AI resourcefully

 

[thettareddast]

I wonder if this could actually be the impetus Apple needs to start its own foundry. Chip production is the only major thing they're not already doing in-house. Considering the weakness of TSMC being the Chinese government finally putting their foot down on Taiwan's self-government, plus having to compete with all of the other business TSMC receives from other companies, AI demand driving chip prices through the roof might just be the last straw. Wouldn't that be fun if they just went and bought Intel?

A great opportunity a mere 1 year ago when Intel was 1/8th the price, trading at its book value.

(Same time I bought into Intel. Unfortunately I sold out too early).

At current market cap now it would be 200x size the acquisition of Beats.

 

[seek3r]

Why take the chance? They could afford to lose a billion on a new plant, that's ALL THEIRS, They wouldn't have to worry about the future, whatever the industry does would be only affect other companies. Apple's lines would be secure from market needs, THEY would control the line. Now they are open to market instability.

It’s not 1B, it’s *100B*, at least. And that’s just to build the thing, staffing it would be an expensive nightmare too

And building it has another hurdle; even getting the equipment for it is tough right now. Apple would need lithography machines from ASML. Guess who’s got a long, long queue of customers waiting right now?

 

[seek3r]

Yes the supply chain issues were real during the pandemic. Never implied otherwise. What I was trying to get at is the malignant greed of companies to raise prices for any reason only to never have them come back down again ever. Only causing more inflation that they then can’t wait to complain about when said inflation causes to raise workers pay so they can still afford to live.

“Prices take the elevator up and the stairs down” (and they stop on the way down at a level of inflation + extra profit)

 

[seek3r]

Please tell me on a scale of 0-10 how difficult this concept is to grasp:

Without customers, there are no shareholders.

That a company attracts shareholders is ipso facto a signal that people think the company does the right thing to attract customers.

No investor would put money into a business it thinks makes bad products that draw no customers. Because it will not earn money. Because customers are greedy and (rightly) want to get the maximum value for their spending.

I would agree except look at Tesla, which is basically a meme stock

 

[uacd]

You think Android is going to somehow be immune from the memory shortage and price increases? LOL

Still gonna be cheaper.

My original point was that iPhones are already very overpriced, esp comparing to competition. And we don’t even have Ultra yet which will be more than 2000$ a piece. Regular iPhones like 16 and 17 prove to be especially popular among people

 

[Hammerd]

Apple will need to increase device costs "substantially" to maintain its current profit margins given the cost of memory chips and SSDs.

HOW ABOUT YOU LOWER THAT MARGIN temporarily, especially given Apple’s is notably bigger than other manufacturers?!


"We're doing our best to mitigate the huge increases that are being passed to us, and we've been trying to shield our customers from the increases, but the situation has become unsustainable."

Not true. Actually Apple already charge a ridiculous prices for RAM or storage upgrades, the likes of which are still profitable when these components prices multiply by four.

 

[DerekK]

Things have gotten completely out of control. Profits at the major memory fabs are at record highs (Micron went from a $5B loss in 2023 and has a projected gain of $24B for this year) because they cannot keep up with demand.

Financial analysts say things will calm down in a year or two, but given that everything from your fridge to your car is getting more computerized, I don't think that demand (and consequently prices) will drop as low as they once were.

If you need a phone, buy now, or wait 2 years.

 

[DerekK]

Apple will need to increase device costs "substantially" to maintain its current profit margins given the cost of memory chips and SSDs.

HOW ABOUT YOU LOWER THAT MARGIN temporarily, especially given Apple’s is notably bigger than other manufacturers?!


"We're doing our best to mitigate the huge increases that are being passed to us, and we've been trying to shield our customers from the increases, but the situation has become unsustainable."

Not true. Actually Apple already charge a ridiculous prices for RAM or storage upgrades, the likes of which are still profitable when these components prices multiply by four.

Sadly, this is not how our capitalist society works. Making profit isn't good enough. Investors what to see earnings that keep growing over time.

If Apple drops margins significantly, their stock price could drop, and Apple's shareholders (pension funds, investment firms, who would see their portfolios lose money in the process) would put pressure on the board to replace the CEO and pressure the company to cut costs, layoff employees, etc, to get profit margins back up.

Ignoring margins would affect a lot of people, include Apple itself.

I don't want to defend the trillion dollar company, but Apple has done a good job in my opinion of not raising prices for the most part (and I don't count trimming some SKUs as price increases). I would agree with Tim that this is not sustainable and they cannot do it forever.

 

[zenmacx]

Industry wide, no surprise. The market will adjust.

Precisely.

Apple has perfected the practice of building excellent products and selling them at premium prices.

Perfect… no, Excellent… yes!

 

[Hammerd]

Sadly, this is not how our capitalist society works. Making profit isn't good enough. Investors what to see earnings that keep growing over time.

If Apple drops margins significantly, their stock price could drop, and Apple's shareholders (pension funds, investment firms, who would see their portfolios lose money in the process) would put pressure on the board to replace the CEO and pressure the company to cut costs, layoff employees, etc, to get profit margins back up.

Ignoring margins would affect a lot of people, include Apple itself.

I don't want to defend the trillion dollar company, but Apple has done a good job in my opinion of not raising prices for the most part (and I don't count trimming some SKUs as price increases). I would agree with Tim that this is not sustainable and they cannot do it forever.

I get your point, but Apple also has to take into account that people’s budgets aren’t indefinitely expandable and that numerous and massive price hikes will eventually lead to less sales.

As you said we customers have suffered from several mandatory pricey upgrades disguised as "we are increasing base storage". Nope you’re just upselling.

 

[chelsel]

How does that solve dealing with higher RAM prices?

Less RAM required

 

[dampfnudel]

I’m guessing that the price increases will stick around even after AI demand crashes when that finally happens.

 

[Happy_John]

I get your point, but Apple also has to take into account that people’s budgets aren’t indefinitely expandable and that numerous and massive price hikes will eventually lead to less sales.

As you said we customers have suffered from several mandatory pricey upgrades disguised as "we are increasing base storage". Nope you’re just upselling.

Prices will rise to what the market will accept and the market can bear.

Realistically, Macs are cheaper now than they were in the last four years of the Mac Intel era, adjusted for inflation, but you now get far more for your money.

For a year or so Macs have been the more affordable option at the lower end of the market.

iPhones haven’t had a price hike, but storage a memory has increased.

A price hike is inevitable. Not just from Apple, but across the industry.

What I hope is that Apple deliberately make the price increase less than expected and less than being touted by leakers and pundits. That way they can save some face. If their price increase is less than the average price increase across the industry, they’ll look pretty good ( but not on MR, because people do like to complain on forums).

But, even with a price hike, potential customers will not stop buying. And if they do keep buying, that itself vindicates the price hike. Because, getting back to where I started, prices rise to the limit the market will accept.

 

[DBRK95B]

I’m interested. I also have a 2014 Mac mini running an outdated version of macOS 12. Do you think it would run better on Linux? Do you have it installed on the internal SSD or do you boot from an external drive?

I suggest you try installing Sequoia (via OCLP) on an external SSD. If the performance is adequate booting from the external SSD, you can keep OS 12 installed on your Mini's internal drive. "Mr Macintosh" posted an excellent YouTube video with step-by-step instructions on installing OCLP/Sequoia onto an external SSD. I did this on my 2017 iMac and I've been very satisfied with the performance. It might work equally well on your 2014 Mini. IMHO, it's worth trying before you commit to a more major transition to a Linux OS.

 

[tadzooks]

In other words, “it’s unavoidable that myself and the shareholders are not going to make as much money, we just cannot survive on the current trajectory, therefore we have to raise prices so we can sustain our way of living.”