Apple flags unprecedented memory chip price rise as costs squeeze margins
Apple warned memory chip prices have risen unprecedentedly, with CEO John Ternus expecting higher costs in Q4, after fiscal third-quarter revenue rose 12%.
What you need to know
Apple warned of an unprecedented rise in memory chip prices, with new CEO John Ternus predicting even higher memory costs in the fourth quarter, The Guardian reported. The company posted fiscal third-quarter revenue of $114.5bn, up 12%, and earnings of $2.10 a share, beating FactSet expectations, while shares fell 2.75% after hours on margin concerns.
- Apple's fiscal third-quarter revenue rose 12% to $114.5bn from $102.5bn, The Guardian reported.
- Earnings were $2.10 a share, above the $1.99 FactSet analyst consensus on $113.4bn revenue.
- CEO John Ternus said memory pricing is unprecedented and predicted higher costs in the fourth quarter.
- Apple shares fell 2.75% in after-hours trading as higher memory prices were expected to pressure margins.
- Ternus said June iPad and MacBook price rises and September iPhone price rises offset some cost impact.
Cost pressure from memory supplies
Apple told investors that higher memory chip prices will eat into profit margins, according to The Guardian. On a conference call, new chief executive John Ternus called current memory pricing unprecedented and forecast that fourth-quarter memory costs would exceed the prior three months.
The warning comes as demand from AI datacentres tightens memory chip supplies, a squeeze the industry has tracked for months. Ternus said Apple's June increases for iPad and MacBook prices, followed by September iPhone increases, provided some offset.
Quarterly results and market reaction
Apple reported fiscal third-quarter earnings of $30.71bn, or $2.10 a share, up from $27.47bn, or $1.85 a share, a year earlier. Earnings included five cents a share from tariff refunds. Revenue rose to $114.5bn from $102.5bn.
Analysts polled by FactSet had expected $1.99 a share on $113.4bn in revenue. Despite the beat, Apple shares were down 2.75% in after-hours trading on Wall Street. Quilter Cheviot's Ben Barringer described the results as OK but on the disappointing side, citing weaker iPad and wearables performance and services growth of 10%, below the group average.
Analyst view on AI spending
Emarketer analyst Jacob Bourne said record iPhone revenue and strong China growth showed the resilience of Apple's business. He said Apple's cautious approach to AI infrastructure spending had helped preserve cashflow, while partnerships such as the one with Alphabet could strengthen its AI capabilities without the financial risks peers face.
How much did Apple's revenue rise in its fiscal third quarter?
Apple's revenue rose 12% to $114.5bn from $102.5bn a year earlier, The Guardian reported. Earnings came in at $2.10 a share, above the $1.99 FactSet analyst consensus.
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