Business · Companies · 32 mins ago
Apple warns rising memory costs will pressure profit margins
Apple warned that rising memory costs are squeezing its profit margins during its latest earnings call.
The company reported record September-quarter revenue of $114.5 billion, but its overall gross margin fell to 47.9%.
Apple said higher memory prices were the main reason margins fell, even after tariff refunds provided some relief.
Recent price increases for iPhones, Macs and iPads, along with lower-cost inventory and savings on other components, will offset some of the pressure.
Siri AI will add costs because Apple expects to spend more to run the service and will recognize some related device revenue over time.
Apple forecasts gross margins of 45% to 46% for the December quarter, which is its first quarter of 2027.
Memory prices are expected to keep rising beyond December, and Apple has not said whether it will raise product prices again.
Apple expects rising memory prices to put further pressure on profit margins in the December quarter and beyond.
The company forecast gross margin of 45% to 46% for the December quarter, down from 47.9% in the September quarter.
Apple said higher memory costs and expenses related to its Siri AI rollout would weigh on margins.
Recent price increases for iPhones, iPads and Macs, along with lower-cost inventory and savings on other components, are expected to offset some of the pressure.
Apple did not say whether it would raise product prices again.
- Who
- Apple, represented on the earnings call by CEO John Ternus and CFO Kevan Parekh.
- What
- Apple warned that rising memory costs and Siri AI expenses would pressure profit margins.
- When
- The warning came during Apple's earnings call on November 2, 2026; the company forecast the December quarter.
- Where
- Not stated.
- Why
- Memory prices are rising, while operating Siri AI will add cloud costs and affect how some device revenue is recognized.
This story does not have two clearly opposing sides.
Apple reported gross margin of 47.9% and said higher memory costs had already affected results.
Apple discussed rising memory costs and Siri AI expenses during its earnings call.
Apple expects gross margin of 45% to 46% and says memory costs will be higher.
Apple expects prices for memory purchases to keep rising and the benefit of lower-cost inventory to decline.
- September-quarter gross margin
- 47.9%
- December-quarter gross margin forecast
- 45% to 46%
- September-quarter revenue
- US$114.5 billion
- Inventory
- US$14.5 billion, more than double year over year
- Manufacturing purchase obligations
- Increased by US$33 billion from June to September
6 sources
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What people are saying
What we're seeing with memory pricing right now is unprecedented
When you remove the tariff refunds from both the June and September quarters, both company and product gross margin would be down about one point sequentially, primarily driven by higher memory costs.
Consistent with how we’ve always accounted for Maps, Siri, and iCloud, for the devices we sell that include these bundled services, we defer a portion of the revenue and recognize it over the life of the device.