iPhone Prices Set to Skyrocket, Apple CEO Resigned to Fate

Apple plans to raise the prices of several products to offset the surge in memory and storage chip costs, which continue to skyrocket due to an explosion in demand from the artificial intelligence (AI) industry. Apple CEO Tim Cook revealed the situation directly. Cook admitted the company has tried hard to hold back price increases to avoid passing them on to consumers. However, current component market conditions make this difficult to sustain. “Unfortunately, price increases are unavoidable,” Cook said in an exclusive interview with The Wall Street Journal. “We are doing our best to mitigate the impact of price increases being charged to us, and we have tried to protect customers from those increases, but the situation has become unsustainable,” he continued. Cook did not disclose when the price increases would take effect, how large they would be, or which products would be affected. Apple’s next major product launch is expected in September with the iPhone 18 line-up, rumoured to feature the company’s first foldable iPhone. However, price increases could occur sooner on the Mac and iPad lines. Apple already raised the starting price of the Mac Mini last month during a product launch event. Chip prices are soaring because of AI. The spike in memory and storage chip prices is triggered by the growing needs of AI companies for these components. Massive demand from AI data centres is thinning supply and causing prices to surge sharply. According to research firm TechInsights, Apple must significantly raise device prices to maintain its current profit margins. The firm estimates the next-generation iPhone Pro could cost about US$270 more. Memory and storage chips are essential components in various electronic devices, from smartphones and laptops to game consoles, medical equipment, and vehicles. However, AI servers are now absorbing far larger volumes of chips than before, making it difficult for even a company as large as Apple to secure supply. Since last year, when tech giants like Google, Microsoft, Meta, and Amazon began announcing surges in AI capital expenditure, memory and storage chip prices have increased up to fourfold. TechInsights predicts this upward price trend will continue until 2027. Cook specifically highlighted the DRAM market as the source of the problem. He noted that more production capacity is being allocated to high-bandwidth memory (HBM), a specialised memory type used in AI servers. “There is less supply at a time when consumers want devices, and the memory companies are passing on very large price increases,” Cook said. “We clearly need memory prices and supply to return to reasonable levels for consumer products. That is the bottom line,” he added. The global DRAM market is currently dominated by three companies: Samsung Electronics, SK hynix, and Micron Technology. The NAND market is also filled by these three alongside Kioxia and Sandisk. The AI demand boom has sent these companies’ performance soaring. Over the past 12 months, shares of Micron and SK hynix have reportedly surged more than 800%, while Kioxia and Sandisk rose about 4,600%.