Photo Credit: Omid Armin
Apple CEO Tim Cook says raising prices on its products will be necessary to offset the skyrocketing costs of memory and storage. But will subscriptions like Apple Music be affected?
As memory and other components surge in price due to artificial intelligence and other tech companies buying them up to build data centers, Apple CEO Tim Cook tells The Wall Street Journal that price increases on the company’s products will be “unavoidable.” It’s not yet clear when the planned price increases will go into effect, or how steep the price increases will be. It’s also unclear whether such changes will impact subscription services from the company, such as Apple Music.
“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 said the prices of both memory and storage are increasingly an issue for the company, but memory in particular was the bigger focus of the conversation. Cook specifically called out the increased allocations of memory going to the reportedly high-bandwidth usage required for AI servers.
“There’s less supply at a time when consumers want devices, and the memory guys are passing along huge price increases,” he said. “We definitely need memory pricing and supply to return to reasonable levels for consumer products. That’s the bottom line.”
Apple is likely to have its next major product launch in September with the iPhone 18 lineup, which is also expected to include a foldable iPhone. However, price increases—especially on iPads and Macs—might hit even sooner. Notably, the company already raised the starting price of the Mac Mini last month, sandwiched between two launch events.
According to research firm TechInsights, to maintain its profit margin while raising prices to offset the cost of memory and storage chips, Apple would need to add approximately $270 to the price of the next iPhone Pro model.
Apple spends “in the low tens of billions of dollars” annually on memory and storage, according to sources familiar with the matter, making it one of the largest customers in the world. That has traditionally left Apple in a position to get the lowest prices from its suppliers by sheer bulk. But now that AI companies have come knocking down the door, even Apple has been put on the back-burner.
It’s a previously unheard-of phenomenon; one that Cook said is unlike anything he’s ever seen while working in the electronics world, across IBM, Compaq, and Apple.
“This is a hundred-year flood,” Cook said. “I’ve never seen anything like it in any area in over 40 years.”