Apple warns of 'unprecedented' rise in memory chip prices

Apple told investors that a surge in memory chip costs is unprecedented and will weigh on profit margins, even as price increases and stronger-than-expected revenues have helped offset some of the impact. The company said it is competing with datacentres for constrained supplies and its shares fell in after-hours trading.

Apple has warned investors that it is facing an "unprecedented" increase in memory chip prices that will erode its profit margins, the company said, as it competes with datacentres for limited supply.

Supply squeeze and competition

The iPhone maker said the jump in memory-costs is driven by intense demand from large-scale datacentre operators and other customers, putting pressure on component availability. Apple said it is contending with those rivals to secure the chips it needs for its devices.

Mitigating measures and revenue performance

Apple added that its decision to raise product prices has helped to offset part of the cost increase, and that overall revenues have come in stronger than the company expected. Nevertheless, it cautioned that the higher component costs will still reduce profit margins.

Market reaction and outlook

News of the warning prompted a fall in Apple's shares in after-hours trading as investors weighed the prospect of sustained margin pressure. The company did not provide detailed forecasts in the statement but signalled that supply-chain dynamics and component pricing will be key variables for its near-term profitability.

Analysts and market participants will be watching how long the memory-price surge lasts and whether Apple can further mitigate the impact through pricing, procurement strategies or product mix changes.