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

[BGrifter]

Apple should build a memory plant.

It’s more environmentally friendly to plant a grove of memory trees.

Then they just need to hire enough staff to keep them watered and pick the RAM before it gets too ripe.

 

[hokuspokus]

I wonder if there'll be a rumor of the rumored price of the foldable iPhone supposedly increasing.

 

[SFjohn]

I think they’ll do something similar to a couple years ago and increase the base iPhone 18 pro to 512gb and keep the price of that configuration the same. And maybe add a 2TB option.

The 17 Pro already has a 2TB option! 😉 🤷

 

[mozumder]

Ooof my MaxBook Ultra M6 upgrade with 256GB RAM and 16TB SSD I'm planning will probably be over $10k.

 

[HylianKnight]

With Apple’s margins, I’m sure they could continue to eat the cost and it would, in fact, be sustainable for them.

 

[whitby]

The real joke here is that these costs are being increased just at the time we need more RAM to be able to use the AI that is causing the prices to rise. Self destruction awaits. This is total and utter nonsense, but I completely understand that Apple must respond to increasing component prices. They did not cause this as they did not waste their money by investing in these multiple duplicated data centers.

There is going to be major consolidation at some point as investors realize that there is no payback model (non of the companies who develop AI models make money on the model) a) if the people who use these AIs cannot buy the devices to use it and b), more importantly, you cannot spend vast sums of money duplicating these models and expect a return. At some point the bubble will burst and RAM will become available again, but I am not holding my breath.

 

[ab2c4]

I have been telling people the last few months “if you know you need a phone or computer in the next year, or even think you might, you better buy now or you will be paying a lot more for the same product soon”.

 

[RMMediccc]

Where is my popcorn.....?, Ah, there it is. LFG!

 

[antnythr]

You didn't think Apple was going to pay for Siri AI with their own money, right?

 

[Flight Plan]

Funny how some people still think AI is a "bubble."

Those people probably thought smartphones were gimmicks and are still waiting for fax machines to make a comeback.

There is "bubblesque behavior" surrounding AI. At some point, we will see a correction.

AI is a bubble. These companies are burning through cash and resources like crazy. There's a limit and we will find it one day. It may be in six months, it may be in six years. But it will happen. And I am generally a pretty tech-forward person.

SOME companies are burning through cash and resources like crazy. But in general, I agree with your statement that there's a limit and we will find it one day.

I was expecting them to raise their prices months ago. Their competitors have been raising prices way before. If anything it seems they actually tried their best to delay having to do so, by removing certain memory configurations recently and earlier than that keeping the prices as they were.

Only those who have not been following this crisis can be surprised by this.

View attachment 2639190

Wow, what a story a chart can tell. Thank you!

It might pop (some re-evalution of costs and corporate value) but it will be like the Dot com bust. AI isn't going away just like the internet didnt go away. It is never going away and it will only grow.

I don't know what you remember about the .com bust, but man oh man, that was pretty brutal. The housing bust was just as brutal. This will be brutal too, but I do agree with you that AI, just like the Internet and homebuilding, won't go away, and that instead, it will grow over time.

Why doesn't Apple spend some of those billions and build a chip fab? Always relying on 3rd party.

A lot of companies used to have a computer room, with one or more mainframe computers in there. But a lot of companies started doing away with mainframe computers in the 1990s and into the 2000s, in favor of server farms running Unix, Linux, or Windows Server.

And when cloud computing came along, a lot more companies started doing away with their server farms, in favor of running AWS or Azure. Suddenly, you could stand up an application just by filling out a form on a web browser, and then just minutes later, you'd have a database instance up and running and ready to start being populated with data!

Those things run in data centers. Data centers that, SURPRISE! are not being built by those companies. They are just being started up by using the AWS or Azure services to configure your applications. So now I don't have to build a site, I don't have to worry about all the crazy stuff a data center needs like power and ping, and I don't have to hire people and buy equipment to help them rack-and-stack 50 pound servers into walls and walls of 19" cabinets. I don't need to lose sleep about server security or disaster recovery services, and I don't even need to worry about some homeless guy wandering in, getting past the security guards, and parking his shopping cart in the employee break room.

I once had a conversation with one of my senior managers. Back then, he said, "we're really good at running mainframe computers, server farms, and man oh man, we sure can run data centers too! But none of those things are what our business is all about.

The more time and trouble we put to running mainframe computers and building our own data centers, the less we can do in our main business."

If it was 1970, he would be wrong. But in the 2020s, he was right. 100% right.

And THIS is why Apple doesn't run its own fab foundries.

TLDR: Running fab foundries is not what Apple does. Just the same as how they don't have employees assembling iPhones and airpods in some back lot outbuilding somewhere.

AI tells me that it costs between 15 to $50 billion. Even on the high end, that's peanuts for a multi trillion dollar company. And they could make stuff for others if they have capacity.

15 billion here, 50 billion there...there's always MORE money to be spent than there is money. Because of that, NONE of it is "peanuts".

It’s not. Just think about it, they don’t want to increase prices. Sales will take a hit.

PlayStation did it multiple times already for this same reason and sales have tanked considerably. Microsoft can’t even manufacture Xbox Series consoles now because they were already eating like 200 dollars on each Series X sold. This is a huge mess overall and implying they can just eat the cost is wishful thinking.

Good points. Here's another one.

Economies can take a HUGE hit with just the raising of interest rates by a quarter percent here or a quarter percent there. Likewise, when you lower interest rates, economies can recover.

Well, as long as you don't shoot yourself in the foot by printing more money, which almost always ends up increasing inflation.

It is not just the base capital cost. You also need to hire the expertise to run it. And that can easily run into the billions per year. And most of that talent is foreign and the current Administration is generally against immigration (though maybe Apple could get them all those Trump Gold Visas. 😛 ).

And of course you can't build a fab in a day. And I expect the equipment that goes into it has long lead-times. And once you have that fab, it is designed around a certain process and capacity. If what you need changes, then at best you spend billions making changes and at worse you spend tens of billions starting over.

Better for Apple to do what they are doing now, investing in existing Intel and TSMC fabs based in the US and helping them fund new US-based fabs on newer processes (I don't see TSMC ever letting their absolute latest processes leave Taiwan). That way, you have first-access to the product. This is what Apple did with TSMC in Taiwan to help them scale to the levels they are now.

Reports state Apple's latest DRAM contracts are twice as expensive because they are out-bidding every other smartphone OEM, so either those "cheap" Android smartphones will not be so cheap, or they just won't be available due to lack of DRAM to put into them.

Excellent treatise. Well done.

The AI bubble doesn’t mean the technology is useless. Just that the current level of investment and lack of demonstrable returns is unsustainable.

This is true of any bubble; well done.

I think there will be plenty of useful tech to pick up off the scrap heap. But right now AI is driven by marketers and hype men burning mountains of cash for lousy returns.

There always is plenty to benefit from after a market correction.

Remember, this is a manufactured crisis. We should NEVER have relied on just three memory manufacturers. There never should have been any tariffs. AI should've only been allowed to buy parts they had cash to pay for, but their access to unlimited funds has driven prices to the Moon.

I agree that only having 3 memory manufacturers is an unreasonably high risk level.

I am neutral on tariffs, but I share your dislike for all things debt.

And Timmy? "We know what we're good at" is not a good reason to avoid building your own foundry. A company of your size knew decades ago that demand was surging for these parts. Ever heard of vertical integration? It saves you money in the long run. THIS is why you LEARN how to make memory, so you aren't flat-footed when supply is constrained.

This is where you and I disagree. Every company needs to make the decision "insource vs. outsource", and this is the decision that Apple made. Whatevs; it's their choice.

What kind of company this size can't walk and chew gum at the same time?!

You are being unfair with your insults.

I agree with some of what you're saying, but not with the conclusions.

Business dynamics lead to situations in which a whole industry depends on one or very few suppliers if those suppliers are the best or the most effective ones and the barrier of entry is high. This is how everyone came to rely on TSMC and Taiwan. Same thing about memory makers.

Starting up your own is not like spraying Febreze. Apple would have the capital, but it takes a few years to get up to speed.

And to your "What kind of company" question: I suggest you start buying computers from all these companies that make their own memory, like Microsoft, Google and... oh.

Apple "might" have the capital, but then that capital would not be available for any other use. That's the hard truth about budgeting. There are always more things to buy than there is money to buy it with.

I think this RAM crisis will drive people back to native apps. Electron based crud shovellers and browser fatware pushers are going to suffer big time.

I don't know what any of that means, but somehow "fatware pushers" seems oddly specific and very personal. 🤣

I absolutely want AI. Not at any price, but I generally want it.

People like you have been going on for years now how supposedly nobody wants it. That's great, because then those companies will all go bankrupt and we don't have to put up with Amodei's insane proclamations anymore.

This is an excellent point! A lot of people want AI, and there are a million different reasons for wanting it, and at least half of them are good reasons.

They’re not. They don’t have buildings to put the servers in that need the RAM yet. Even getting power in for a DC can be a multi-year task after planning process, which isn’t going well. Before then they will need to pay up and they don’t have any capital so there’s going to be a glut of back ordered stock. That’ll drive prices down again.

Everything is running on a huge dependency stack and promises.

I know of one company that, during the stand-up of a new data center, could not get a fiber company to install its infrastructure...for almost a full year! It was during covid.

But that didn't stop the company from targeting and laying off a huge SLEW of people who had nothing to do with the delays. Oh, it was definitely punishment. Thankfully, HR had a bugaboo with firing squads.

I'm hoping for an M6 MBP with more than 128GB of ram this fall. Guess I'd better keep the car running for a few more years so I can afford the payments.

Yeah, me too! Unfortunately for me, I'm thinking of buying a pre-owned Tesla early next year. The Mac will end up costing me 30-40% the cost of the car!

I'd love for AI to make my bed, do my laundry and cure cancer. I don't need it trying to make soul-less art.

I think you're underestimating the capabilities of AI even in these early days. AI can already write code. Soul-less code maybe, but code nonetheless. And its code works.

Apple should rename Siri to Sori

Bad joke. But I did laugh.

I do wish I could rename my own instance of Siri.

Heh, “unavoidable”? What’s wrong shrinking their ridiculous 50% profit margin to 30% just for a couple of years? If anything, Apple IS in that position to delay price hike as long as they please. But nope, ain’t gonna lose on profit margin so $100-$1000 price hike there is in September.

It's not a 50% margin. Depending on the part of Apple's business, it could be from 20% to 40+%.

Yes, that's a healthy margin, even at 20%.

But it DOES NOT MEAN that cash is unlimited. Cash, whether for a person, a company, a charity organization, or a country, must be properly managed.

It also shows that your assumption that Apple could just "take a hit of 20%", that would lower their profit margin to anything from 0% to 20% or maybe a little more.

This is entitlement thinking, to just assume that any company could just "give up" 20% of their top line for whatever feel-good purpose the public wants to imagine.

Personally, I think it's jealousy and envy.

If it were financially advantageous for Apple to go into the actual chip-making business, rather than chip design and outsourcing manufacturing, they would have done so.

It’s crosssed my mind more than once though, that intel have a lot of fabs/foundries worldwide, and now a chunk of Intel is government-owned, so it mightn’t be the most ridiculous idea for Intel to pivot and allocate some of their chip production to memory and NANDs. It would involve change, but surely it would cost less time and money than building a fab and production lines from scratch.

I think the US Federal government owns up to 10% of INTC. The stock is currently near old highs, but the US government is notoriously BAD at investing in companies. I think it's only a matter of time before Uncle Sam effs it up. At only 10% of ownership, it will take a long time, but we should never underestimate the government's levels of corruption, abuse, theft, incompetence, and mismanagement.

AI isn't a bubble. There are several bubble-like companies in the AI space - most likely OpenAI, that is spending money they simply don't have and are now starting to see pushback from customers on the pricing of tokens. Companies like Microsoft, Amazon, Meta, Google and the like actually have the cash reserves and other sources of income to actually keep paying for the hardware.

Lots of people may decry AI and say it just makes pointless slop videos or insipid music / art, but these were always the gimmicks, real AI is powering businesses to become much more efficient, automating routine tasks, allowing faster data analysis and the like. As more and more companies embrace AI, there will need to be more and more servers to cope, even if all slop generating tools vanished tomorrow.

I think price rises are going to be very large, but I'm confident they will come down as the price of these components falls. Why is this? Because maintaining high prices isn't sustainable for maintaining profit. Sony have disclosed that since the recent component cost-related price rises of the Playstation 5, sales have fallen by over 50%. I predict this will happen to Apple too. Put the price of an iPhone up from $800 to $1000 or an iPhone Pro from $1100 to $1300 in order to maintain margins and you are going to see a drop off in sales, which will result in a decrease in profit. It might not result in a 50% sales drop, but I can see a 10-20% drop as more people put off upgrading for a year or so more. What

I'm interested to see is what happens with the iPhone Fold and MacBook Ultra which seem to be launching at the exact wrong moment for expensive/premium new products that will sit above existing models. I can see the Fold starting at $2500 or higher and the MacBook Ultra starting at $4000 or higher - even with the Apple fanboy crowd, these prices will hit demand.

Interesting points...thank you.

There their, in they're rooms.

We see what you did there! 😏

What a lame excuse to raise prices. They are one of the world's largest companies. They can afford to absorb prices, we don't need all this AI bullcrap either.

YOU SAY they can afford to absorb prices...but there's always more to spend money on than there is to spend. Always. And only the Federal government can go $30 trillion into debt. Apple can't do that; not without dire consequences.

 

[Smartuser]

The real joke here is that these costs are being increased just at the time we need more RAM to be able to use the AI that is causing the prices to rise. Self destruction awaits. This is total and utter nonsense, but I completely understand that Apple must respond to increasing component prices. They did not cause this as they did not waste their money by investing in these multiple duplicated data centers.

There is going to be major consolidation at some point as investors realize that there is no payback model (non of the companies who develop AI models make money on the model) a) if the people who use these AIs cannot buy the devices to use it and b), more importantly, you cannot spend vast sums of money duplicating these models and expect a return. At some point the bubble will burst and RAM will become available again, but I am not holding my breath.

Of course there's going to be consolidation. But not the total implosion that people who know nearly nothing of AI but post with 200% conviction wish for.

Hardly anyone here will remember this, but there was a 4 year long stagnation in memory chips between 1992 and 1996. Every regular PC had 4 MB of RAM. Then Windows 95 was released in 1995, needed 8 and a short time after that, RAM prices declined very fast until a few years later, everyone suddenly had 4 GB of RAM. This goes against the theory that consumers needing more will necessarily raise prices.

Every few years, some components hit a wall, but situations also have an interesting way of fixing themselves after tome time.

 

[Smartuser]

With Apple’s margins, I’m sure they could continue to eat the cost and it would, in fact, be sustainable for them.

They should hire you as a CEO then. I as well like to spend other people's money.

 

[Serrafemme]

The existence of AI has garnered no benefit to humanity to warrant the huge price increases in tech products being passed on to consumers.

 

[jonnyb098]

Give Apple more money so they can buy more chips so you can all run more AI prompts that use more electricity and energy than you can possibly imagine. Such a “green” company 😂

 

[maxoakland]

That's simply not true. What's true is Apple can't keep the same price while maintaining their industry-high margins. That is what the actual truth is

 

[maxoakland]

The existence of AI has garnered no benefit to humanity to warrant the huge price increases in tech products being passed on to consumers.

That's not fair! AI can do a lot more than that. It's also ruined web searches, slowed browsing on the internet, pirated millions of books, movies, music, and even our internet posts. And now they can sell it back to us!

 

[Abydos]

it seems frank Zappa's lyrics from Cozmik Debris is vulgar, who knew I thought it was an appropriate remark on the state of the memory market - maybe I should not use lyrics from the Fugs (their name before they adopted another more vulgar name) on this forum

 

[gothicgeek]

I’d venture to guess that they will do one of two things: increase the base price with more storage or increase the price to upgrade storage. I also think there is a chance they might eliminate the 1tb iPhone option.

 

[imamacperson]

You can bet prices will never go back down either!

 

[BGrifter]

The existence of AI has garnered no benefit to humanity to warrant the huge price increases in tech products being passed on to consumers.

This is it, none of the results justify the unprecedented levels of economic disruption.

There’s likely to be useful things to come out of AI development. But it can also be developed without shovelling mountains of cash and resources into a volcano. Just might take a little longer.

I think AI enthusiasts should be the most eager for the bubble to pop. Blast the marketers and conmen out the airlock to make room for smaller more sustainable development lead by the science.

It’s hard to get people excited about useful improvements to a spreadsheet when the guy down the block is promising they’re birthing AI Jesus.

 

[Smartuser]

You can bet prices will never go back down either!

Okay cool, let's make a bet: $20 in 10 years. I say prices for a fully specced out MacBook Pro will drop over the M6 version, adjusted for inflation.

 

[dominiongamma]

Apple should be starting iPhones with 512gb for the pros honestly

Cook is really taking one for John Ternus here, pre-announcing price hikes so the new CEO doesn’t have that be the biggest takeaway from his first launch event in September.

There is "bubblesque behavior" surrounding AI. At some point, we will see a correction.

SOME companies are burning through cash and resources like crazy. But in general, I agree with your statement that there's a limit and we will find it one day.

It's "en masse".

Sorry to club you with Google AI, but here goes:


...so there it is. You're welcome. 😁

Wow, what a story a chart can tell. Thank you!

I don't know what you remember about the .com bust, but man oh man, that was pretty brutal. The housing bust was just as brutal. This will be brutal too, but I do agree with you that AI, just like the Internet and homebuilding, won't go away, and that instead, it will grow over time.

A lot of companies used to have a computer room, with one or more mainframe computers in there. But a lot of companies started doing away with mainframe computers in the 1990s and into the 2000s, in favor of server farms running Unix, Linux, or Windows Server.

And when cloud computing came along, a lot more companies started doing away with their server farms, in favor of running AWS or Azure. Suddenly, you could stand up an application just by filling out a form on a web browser, and then just minutes later, you'd have a database instance up and running and ready to start being populated with data!

Those things run in data centers. Data centers that, SURPRISE! are not being built by those companies. They are just being started up by using the AWS or Azure services to configure your applications. So now I don't have to build a site, I don't have to worry about all the crazy stuff a data center needs like power and ping, and I don't have to hire people and buy equipment to help them rack-and-stack 50 pound servers into walls and walls of 19" cabinets. I don't need to lose sleep about server security or disaster recovery services, and I don't even need to worry about some homeless guy wandering in, getting past the security guards, and parking his shopping cart in the employee break room.

I once had a conversation with one of my senior managers. Back then, he said, "we're really good at running mainframe computers, server farms, and man oh man, we sure can run data centers too! But none of those things are what our business is all about.

The more time and trouble we put to running mainframe computers and building our own data centers, the less we can do in our main business."

If it was 1970, he would be wrong. But in the 2020s, he was right. 100% right.

And THIS is why Apple doesn't run its own fab foundries.

TLDR: Running fab foundries is not what Apple does. Just the same as how they don't have employees assembling iPhones and airpods in some back lot outbuilding somewhere.

15 billion here, 50 billion there...there's always MORE money to be spent than there is money. Because of that, NONE of it is "peanuts".

Good points. Here's another one.

Economies can take a HUGE hit with just the raising of interest rates by a quarter percent here or a quarter percent there. Likewise, when you lower interest rates, economies can recover.

Well, as long as you don't shoot yourself in the foot by printing more money, which almost always ends up increasing inflation.

Excellent treatise. Well done.

This is true of any bubble; well done.

There always is plenty to benefit from after a market correction.

I agree that only having 3 memory manufacturers is an unreasonably high risk level.

I am neutral on tariffs, but I share your dislike for all things debt.

This is where you and I disagree. Every company needs to make the decision "insource vs. outsource", and this is the decision that Apple made. Whatevs; it's their choice.

You are being unfair with your insults.

Apple "might" have the capital, but then that capital would not be available for any other use. That's the hard truth about budgeting. There are always more things to buy than there is money to buy it with.


I don't know what any of that means, but somehow "fatware pushers" seems oddly specific and very personal. 🤣

This is an excellent point! A lot of people want AI, and there are a million different reasons for wanting it, and at least half of them are good reasons.

I know of one company that, during the stand-up of a new data center, could not get a fiber company to install its infrastructure...for almost a full year! It was during covid.

But that didn't stop the company from targeting and laying off a huge SLEW of people who had nothing to do with the delays. Oh, it was definitely punishment. Thankfully, HR had a bugaboo with firing squads.

Yeah, me too! Unfortunately for me, I'm thinking of buying a pre-owned Tesla early next year. The Mac will end up costing me 30-40% the cost of the car!

I think you're underestimating the capabilities of AI even in these early days. AI can already write code. Soul-less code maybe, but code nonetheless. And its code works.

Bad joke. But I did laugh.

I do wish I could rename my own instance of Siri.

That's "suit". "Following suit"

Again, from Google AI:


And there you have it.

It's not a 50% margin. Depending on the part of Apple's business, it could be from 20% to 40+%.

Yes, that's a healthy margin, even at 20%.

But it DOES NOT MEAN that cash is unlimited. Cash, whether for a person, a company, a charity organization, or a country, must be properly managed.

It also shows that your assumption that Apple could just "take a hit of 20%", that would lower their profit margin to anything from 0% to 20% or maybe a little more.

This is entitlement thinking, to just assume that any company could just "give up" 20% of their top line for whatever feel-good purpose the public wants to imagine.

Personally, I think it's jealousy and envy.

I think the US Federal government owns up to 10% of INTC. The stock is currently near old highs, but the US government is notoriously BAD at investing in companies. I think it's only a matter of time before Uncle Sam effs it up. At only 10% of ownership, it will take a long time, but we should never underestimate the government's levels of corruption, abuse, theft, incompetence, and mismanagement.

Interesting points...thank you.

We see what you did there! 😏

YOU SAY they can afford to absorb prices...but there's always more to spend money on than there is to spend. Always. And only the Federal government can go $30 trillion into debt. Apple can't do that; not without dire consequences.

I am totally shocked that you responded to every person’s comment lol that’s commitment

 

[Reason077]

The existence of AI has garnered no benefit to humanity to warrant the huge price increases in tech products being passed on to consumers.

Well, hopefully we can put the AI to work at designing more efficient semiconductors and fabrication facilities so that future generations can enjoy cheaper, more advanced devices!

 

[Smartuser]

There is "bubblesque behavior" surrounding AI. At some point, we will see a correction.

SOME companies are burning through cash and resources like crazy. But in general, I agree with your statement that there's a limit and we will find it one day.

It's "en masse".

Sorry to club you with Google AI, but here goes:


...so there it is. You're welcome. 😁

Wow, what a story a chart can tell. Thank you!

I don't know what you remember about the .com bust, but man oh man, that was pretty brutal. The housing bust was just as brutal. This will be brutal too, but I do agree with you that AI, just like the Internet and homebuilding, won't go away, and that instead, it will grow over time.

A lot of companies used to have a computer room, with one or more mainframe computers in there. But a lot of companies started doing away with mainframe computers in the 1990s and into the 2000s, in favor of server farms running Unix, Linux, or Windows Server.

And when cloud computing came along, a lot more companies started doing away with their server farms, in favor of running AWS or Azure. Suddenly, you could stand up an application just by filling out a form on a web browser, and then just minutes later, you'd have a database instance up and running and ready to start being populated with data!

Those things run in data centers. Data centers that, SURPRISE! are not being built by those companies. They are just being started up by using the AWS or Azure services to configure your applications. So now I don't have to build a site, I don't have to worry about all the crazy stuff a data center needs like power and ping, and I don't have to hire people and buy equipment to help them rack-and-stack 50 pound servers into walls and walls of 19" cabinets. I don't need to lose sleep about server security or disaster recovery services, and I don't even need to worry about some homeless guy wandering in, getting past the security guards, and parking his shopping cart in the employee break room.

I once had a conversation with one of my senior managers. Back then, he said, "we're really good at running mainframe computers, server farms, and man oh man, we sure can run data centers too! But none of those things are what our business is all about.

The more time and trouble we put to running mainframe computers and building our own data centers, the less we can do in our main business."

If it was 1970, he would be wrong. But in the 2020s, he was right. 100% right.

And THIS is why Apple doesn't run its own fab foundries.

TLDR: Running fab foundries is not what Apple does. Just the same as how they don't have employees assembling iPhones and airpods in some back lot outbuilding somewhere.

15 billion here, 50 billion there...there's always MORE money to be spent than there is money. Because of that, NONE of it is "peanuts".

Good points. Here's another one.

Economies can take a HUGE hit with just the raising of interest rates by a quarter percent here or a quarter percent there. Likewise, when you lower interest rates, economies can recover.

Well, as long as you don't shoot yourself in the foot by printing more money, which almost always ends up increasing inflation.

Excellent treatise. Well done.

This is true of any bubble; well done.

There always is plenty to benefit from after a market correction.

I agree that only having 3 memory manufacturers is an unreasonably high risk level.

I am neutral on tariffs, but I share your dislike for all things debt.

This is where you and I disagree. Every company needs to make the decision "insource vs. outsource", and this is the decision that Apple made. Whatevs; it's their choice.

You are being unfair with your insults.

Apple "might" have the capital, but then that capital would not be available for any other use. That's the hard truth about budgeting. There are always more things to buy than there is money to buy it with.


I don't know what any of that means, but somehow "fatware pushers" seems oddly specific and very personal. 🤣

This is an excellent point! A lot of people want AI, and there are a million different reasons for wanting it, and at least half of them are good reasons.

I know of one company that, during the stand-up of a new data center, could not get a fiber company to install its infrastructure...for almost a full year! It was during covid.

But that didn't stop the company from targeting and laying off a huge SLEW of people who had nothing to do with the delays. Oh, it was definitely punishment. Thankfully, HR had a bugaboo with firing squads.

Yeah, me too! Unfortunately for me, I'm thinking of buying a pre-owned Tesla early next year. The Mac will end up costing me 30-40% the cost of the car!

I think you're underestimating the capabilities of AI even in these early days. AI can already write code. Soul-less code maybe, but code nonetheless. And its code works.

Bad joke. But I did laugh.

I do wish I could rename my own instance of Siri.

That's "suit". "Following suit"

Again, from Google AI:


And there you have it.

It's not a 50% margin. Depending on the part of Apple's business, it could be from 20% to 40+%.

Yes, that's a healthy margin, even at 20%.

But it DOES NOT MEAN that cash is unlimited. Cash, whether for a person, a company, a charity organization, or a country, must be properly managed.

It also shows that your assumption that Apple could just "take a hit of 20%", that would lower their profit margin to anything from 0% to 20% or maybe a little more.

This is entitlement thinking, to just assume that any company could just "give up" 20% of their top line for whatever feel-good purpose the public wants to imagine.

Personally, I think it's jealousy and envy.

I think the US Federal government owns up to 10% of INTC. The stock is currently near old highs, but the US government is notoriously BAD at investing in companies. I think it's only a matter of time before Uncle Sam effs it up. At only 10% of ownership, it will take a long time, but we should never underestimate the government's levels of corruption, abuse, theft, incompetence, and mismanagement.

Interesting points...thank you.

We see what you did there! 😏

YOU SAY they can afford to absorb prices...but there's always more to spend money on than there is to spend. Always. And only the Federal government can go $30 trillion into debt. Apple can't do that; not without dire consequences.

Your posts are so good in addressing many of the points I'd like to address as well that I feel you're saving me time 🙂.

About foundries: To me, Apple is the kind of company that likes to be in control of things. When outsourcing things works, such as in hardware assembly, they do it. But if it doesn't work or deteriorates, such as in PowerPC and then Intel CPU development (not manufacturing), they take over or at least pay for companies to have a branch working exclusively for them.

Apple is also a company that invests in things that don't have immediate returns.

Based on all that, I don't know what's keeping Apple or a conglomerate of companies to have one or more of the major memory producers build some production capacity for them.

 

[klasma]

What’s wrong shrinking their ridiculous 50% profit margin to 30% just for a couple of years?

Shareholders would nuke the CEO if they did that. 😉