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AI is hurting Apple in more ways than one: it may force iPhone price increases
A global shortage of memory chips, dubbed "RAMageddon," driven by AI's hardware demands, is prompting Apple to warn of potential price increases for its products. Outgoing CEO Tim Cook told the WSJ that higher costs for memory (DRAM) and storage (NAND) chips are "unavoidable" and "unsustainable," despite Apple's efforts to absorb a fourfold cost increase since last year. Cook did not specify which products or when prices will rise, but he previously flagged the issue after record quarterly sales in April. Incoming CEO John Ternus also issued a warning that month. Memory supply experts told the Financial Times that the iPhone, expected to launch a new model in September, is almost certain to be affected. Research firm TechInsights estimates Apple would need to add $270 to the next iPhone Pro to maintain profit margins; the current iPhone 17 Pro starts at $1,099. Other devices containing these chips—including the Apple Watch, Mac, iPad, and Apple Vision Pro—may also see price hikes, though amounts remain unclear. AI has not yet boosted Apple's fortunes. The company is under pressure to refine its AI strategy and paid a $250 million settlement earlier this year to end a false advertising lawsuit over unfulfilled AI features. At its recent Worldwide Developers Conference, Apple showcased progress, including a Siri overhaul. However, more on-device AI processing could further increase memory needs, suggesting consumers may ultimately pay more for Apple products as the trend continues.