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Cook said in the interview that price increases had become necessary due to skyrocketing prices of LPDDR and 3D NAND memory, which the company uses in its PCs, smartphones, tablets, and other products. He noted that Apple had attempted to offset rising component costs and protect customers from higher prices, but indicated in the interview that the company could no longer absorb the increases indefinitely. While Cook declined to discuss timing or the magnitude of the planned price hikes, some Apple products may see higher prices sooner rather than later. The company already raised the base price of its Mac Mini last month and eliminated its highest-end model.
TechInsights estimates that Apple will need to hike the price of a flagship iPhone Pro model by about $270 to maintain its current gross margins, which could push flagship iPhone pricing into a substantially higher price band. To make matters worse, Apple faces rising DRAM requirements as it expands memory-hungry on-device AI capabilities.
Apple is a unique company in the sense that it is both one of the world's largest suppliers of smartphones and one of the industry's biggest PC OEMs. Still, its Mac business is negligible compared to the iPhone business.
Memory makers are more inclined to ship non-volatile NAND memory to smartphone makers as they can ship LPDDR with it, according to Nelson Duann, a senior vice president of Silicon Motion, speaking in an interview with Tom's Hardware . If Duann is correct that NAND makers prefer smartphones because they can bundle NAND and LPDDR sales, then Apple should be among the most favored customers in the industry, not among the disadvantaged ones.
Apple warns Mac mini and Mac Studio shortages could last for months
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/laptops/SPONSORED_LINK_URL
- https://www.tomshardware.com/laptops/apple-ceo-tim-cook-warns-ai-driven-price-increases-are-unavoidable-says-company-is-trying-its-best-but-the-situation-has-become-unsustainable#main
- https://www.tomshardware.com/membership
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Informational only. No financial advice. Do your own research.