Apple Predicts Higher Memory Costs Will Impact Its Q2 Gross Margin Despite Record Earnings

Apple has responded to concerns about the rising RAM and SSD storage chip prices during its latest earnings call, even as the iPhone maker beat estimates for its fiscal quarter ended December 27. The Cupertino-based tech giant stated that supply chain cost pressures have had a limited impact on its financial performance so far. Apple expects the memory shortage to have a greater impact on its gross margins in the coming quarter. The company reported record revenue of $143.8 billion for the fourth quarter of 2025, marking a 16 percent year-over-year increase.

How the Ongoing Memory Shortage Could Impact Apple's Revenue

During the company's latest earnings call, Apple CEO Tim Cook acknowledged rising memory prices, saying, "We do continue to see market pricing for memory increasing significantly." Cook said that rising memory prices had a “minimal impact” on the company's gross margin in the fourth quarter of 2025. 

The executive, however, pointed out that Apple expects “a bit more of an impact” from the skyrocketing RAM and storage chip prices in the Q2 gross margin. "Beyond Q2, we do continue to see market ⁠pricing for memory increasing significantly. As always, we'll look at a range of options to deal with that", Cook added. 

Apple also faces some constraints in advanced chip manufacturing required for the company's processors for iPhone and Mac models, according to Cook. The iPhone maker will need an increasing number of memory chips as demand for its latest iPhone 17 continues to surge in many global markets, particularly in China and India. The company earlier today announced that it gained momentum in India and saw strong double-digit revenue growth. Cook said the demand for the iPhone in the December quarter was "staggering"

Despite rising costs for DRAM memory chips, Apple registered strong financial results for the final quarter of last year. The company posted a profit of $42.1 billion on revenue of $143.8 billion. The growth is backed by iPhone sales in Greater China. Apple's Services business also hit an all-time revenue high, growing 14 percent year over year.