Apple Sees Memory Costs Pressure on Q2 Gross Margin

Apple Sees Memory Costs Pressure on Q2 Gross Margin

Apple beat estimates for its fiscal quarter ended December 27, reporting record revenue of $143.8 billion, up 16 percent year over year. The company said supply chain cost pressures have had a limited impact on its results so far.

During the earnings call, Apple CEO Tim Cook acknowledged rising memory prices, saying, 'We do continue to see market pricing for memory increasing significantly.' He added that the rise had a 'minimal impact' on the company's gross margin in the fourth quarter of 2025. The company noted that shortages in memory could have a greater impact on gross margins in the coming quarter.

Cook also pointed to constraints in advanced chip manufacturing required for processors used in iPhone and Mac models. He explained that Apple will need an increasing number of memory chips as demand for its latest iPhone 17 continues to surge in many global markets, particularly in China and India. The company said it gained momentum in India and saw strong double-digit revenue growth. In the December quarter, demand for the iPhone was described as 'staggering'.

The management added that beyond Q2, market pricing for memory is expected to rise significantly. 'Beyond Q2, we do continue to see market pricing for memory increasing significantly. As always, we'll look at a range of options to deal with that,' Cook said.