Apple expects the cost of memory to rise through the December quarter and beyond, CEO John Ternus said during the company’s earnings call. He described current memory pricing as “unprecedented” and said costs were already higher in the September quarter, with a further increase expected in December.
Apple partly offset September’s higher costs by using memory purchased earlier at lower prices and negotiating lower prices for some components other than memory. The company expects those measures to help with December’s increases, alongside price increases on iPads, Macs and iPhones in June and September.
Asked whether Apple might raise prices again, COO Sabih Khan did not give a direct answer. CFO Kevan Parekh said the previous increases were made reluctantly and that Apple was carefully weighing their effects on revenue and margins, as well as short- and long-term considerations.
Ternus said the savings from buying memory in advance are expected to diminish over time. Apple’s inventory more than doubled year over year to $14.5 billion. He also said manufacturing purchase obligations rose by $33 billion between June and September, with more details expected in the company’s annual filing.
Apple forecasts gross margin of 45% to 46% for the December quarter, down from 47.9% in September. The company attributed the expected decline primarily to higher memory costs, with some costs related to Siri AI also contributing. Memory constraints are also expected to limit Mac and iPad supplies during the quarter.
Sources: MacRumors.