Chips Getting Pricier: Elon Musk and Tim Cook Unite in Warning
When the leaders of the world’s two most valuable companies independently use the same language to describe economic conditions, it deserves serious attention. That is what has happened throughout this summer, and the warning is now growing louder.
Tim Cook, who led Apple for 15 years before stepping down this autumn, and Elon Musk, the boss of Tesla and SpaceX, rarely agree in public. Yet this time, their assessments are almost word for word alike, backed by data reinforcing the alarm.
In an interview with The Wall Street Journal in June, Cook — who was still Apple’s CEO at the time — said the spike in memory and storage chip costs was unlike anything he had encountered in decades.
“This is a hundred-year flood,” Cook said. “I haven’t seen anything like this in any field in more than 40 years.”
The warning came as Apple prepared to raise prices across its product line-up to offset the sharply rising chip costs in the iPhone, Mac and iPad. Cook described the situation as unsustainable despite Apple’s efforts to shield customers from price increases. “Unfortunately, price increases are unavoidable,” he added.
The main cause is an unprecedented scramble for memory chips triggered by AI data centres. Cook directly linked the shortage to AI companies’ appetite for the same components Apple needs for consumer devices.
Cook has now moved into the role of Executive Chairman after handing the CEO seat to John Ternus on 1 September. His remarks about the ‘hundred-year flood’ stand among his final statements as the company’s top leader.
Elon Musk did not wait long to respond. He quoted Cook’s comments directly on the X platform and added his own view: “The biggest price jump in anything I’ve ever seen as well,” Musk wrote, as reported by Yahoo Finance.
As someone who has managed car and rocket manufacturing through years of supply chain turmoil, Musk’s comments carry significant weight. He also shared an article titled ‘The Data-Center Boom Is Sparking a Third Wave of Inflation’, which argued that AI infrastructure construction in America is driving up prices in everything from smartphones to electricity.
Supporting data show memory and storage chip prices have quadrupled over the past three quarters. Chipmakers have prioritised high-bandwidth memory for AI servers over consumer electronics, allowing manufacturers such as Micron to reap gross margins of up to 84.9% whilst device makers are squeezed.
Apple has begun raising prices on its MacBook and iPad lines by between Rp1.5 million and Rp4.5 million (estimated exchange rate). Other manufacturers, including HP, Dell and Nintendo, have followed suit. Analysts estimate future iPhone generations could see prices jump by more than Rp3 million, pushing Pro models towards the Rp20 million range (US$1,299).
The risk is exacerbated by Middle East conflict pressures keeping energy prices high. BlackRock estimates the conflict could add roughly 0.8 percentage points to global inflation.
When the executives behind the world’s two most sophisticated supply chains compare the current situation to a ‘hundred-year flood’, it warrants a serious response rather than being dismissed as routine corporate complaint. (TheStreet)