Apple Warns It Will Be Hit by Memory Squeeze

Apple just turned in a blockbuster quarter, along with a warning label. The iPhone maker said Thursday that phone revenue jumped nearly 22% to about $57 billion on the back of the iPhone 17 lineup, helping push total quarterly sales to $111.2 billion, ahead of expectations, the Wall Street Journal reports. For the first time, Apple held the No. 1 spot in first-quarter global smartphone market share, per research firm Counterpoint. But Tim Cook, who hands the CEO role to hardware chief John Ternus on Sept. 1, flagged two pressure points: soaring memory prices and tight supply of advanced chips as AI players like Nvidia soak up capacity.

Apple says memory costs will climb "significantly" after June and is weighing ways to blunt the hit. "We believe memory costs will drive an increasing impact on our business, and we'll continue to evaluate this," Cook told analysts, noting that it was his 89th earnings call. He said supply constraints will affect several Mac models, largely due to "off the charts" demand for the Mac Neo. "Apple showed that even the best operators can't fully escape the memory squeeze," Jake Behan, Direxion's head of capital markets, said in a statement, per the AP. "Tim Cook's warning of 'significantly higher' costs in the coming quarters tells you how real the AI-driven supply crunch has become for the entire industry."

Ternus joined the earnings call, with Cook introducing him as the "right leader ready to step into the role," CNBC reports. Ternus promised an "incredible roadmap ahead" and said that while he wouldn't disclose details, "this is the most exciting time in my 25-year career at Apple to be building products and services." The Journal notes that Ternus will take over just before Apple is expected to announce a new foldable iPhone that is expected to grab around half the foldable smartphone market. The company, which has fallen behind rivals in AI, is also expected to release an improved version of digital assistant Siri.