Apple hikes prices, but leaves its cash cow untouched
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Live Events Memory crunch driven by AI demand as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Apple on Thursday increased prices for several iPad and MacBook models, saying it could no longer absorb soaring memory and storage chip costs fueled by the artificial intelligence industry's rapid expansion of data centers, Reuters reported.The price hikes do not affect the iPhone, Apple's biggest revenue generator. However, they raise the starting price of the MacBook Neo — the company's entry-level laptop aimed at competing with lower-cost Windows and Chromebook devices — to $699 from $599, only months after its launch.The move highlights how even Apple, renowned for its supply chain management, is grappling with a sharp increase in memory costs that has clouded the outlook for the broader smartphone and personal computer markets.Memory suppliers including Micron have increasingly prioritized orders from AI chipmakers such as Nvidia, boosting their profits but tightening supply for consumer electronics manufacturers and forcing many to raise prices."We have never seen a component price increase this much, this quickly," Apple said in a statement.
"We have shielded our customers from these increases so far, but we have now reached a point where we need to begin raising prices on a number of products, including today's increases for iPad and Mac."According to updated pricing on Apple's website, the MacBook Air with 512 gigabytes of storage now costs $1,299, up from $1,099, while the MacBook Pro with 1 terabyte of storage has risen to $1,999 from $1,699. The iPad Air with 128 gigabytes of storage now costs $749, compared with $599 previously.Apple had warned in April that existing inventories had helped it keep gross margins above Wall Street expectations, but rising memory costs would begin to weigh on profitability by the end of June."We expect significantly higher memory costs," Chief Executive Tim Cook told analysts during an earnings conference call in April."Where we don't give color beyond June, I can tell you that beyond the June quarter, we believe memory costs will drive an increasing impact on our business," Cook had said.Apple did not disclose what measures, apart from raising prices, it is taking to mitigate higher memory costs.
The company said it was continuing to look for solutions despite the increases.Industry tracker TrendForce estimates that prices for dynamic random access memory (DRAM), a key component used in most electronic devices, jumped by as much as 98% in the first quarter of 2026 and are expected to rise a further 58% to 63% during the current quarter.The surge — dubbed "RAMageddon" by some industry observers — has been driven by a boom in AI infrastructure spending. Companies such as Nvidia have signed long-term supply agreements with memory manufacturers racing to expand production capacity.Micron said on Wednesday that it had secured $22 billion in long-term customer commitments aimed at guaranteeing future memory supplies.Higher component costs are expected to weigh on consumer electronics demand. Research firm IDC forecasts the smartphone market will record its steepest-ever annual contraction of nearly 14% this year, while global PC shipments are projected to decline 11.3%.One of the few bright spots for Apple has been the MacBook Neo, introduced in March.
The BriefWire