Thanks to Apple’s long-term supply chain contracts, your iPhone and MacBook have not seen any price increase at a time when all its competitors continue to raise theirs. However, that might be about to end.
According to a Financial Times report, memory costs for iPhones could jump from around 10% of the total component cost today to as much as 45% by next year, a rise of over 400%.
Naturally, this will result in price hikes across Apple’s product lineup, especially the iPhone.
So why is this happening?
As it seems to be the answer for everything from past year, it’s AI. Companies building out data centers for frontier AI models are outbidding consumer electronics manufacturers for limited memory supply.
Nvidia and other AI infrastructure companies are reportedly locking in capacity with massive upfront payments worth billions of dollars. That has left Apple, a company used to dictating terms to its suppliers, suddenly scrambling to compete for the same chips.
If that is not enough, the war in Iran has caused a shortage of key materials used in PCB manufacturing, which will further contribute to an increase in consumer electronics prices.
Will Apple raise iPhone prices?
That is the question John Ternus will have to answer, and there is no good option here. Passing the cost on to consumers means higher iPhone prices, which is never a popular move, especially in price-sensitive markets like India and China, which Apple considers its future growth market.
Absorbing the cost means taking a significant hit to Apple’s profit margins, something that investors will not be thrilled about. That said, since Apple already charges a premium for memory upgrades, if there’s one company in the world that can absorb the extra costs, it’s Apple.
What does this mean for you?
If Apple passes on the cost, expect your next iPhone to be noticeably more expensive than its predecessor. The launch is already being restructured, with only the Pro models expected in the usual fall window.
Apple is also planning to release the iPhone Fold, M6 MacBook Pros, and may be an iPhone Ultra, all with higher starting price tags. Hopefully, these premium devices will absorb the increased production cost and keep the more affordable options at their current prices.
Whatever happens, one thing is sure: the era of predictable iPhone pricing may be coming to an end.
