Tim Cook Gives 'Clues' on Global Memory Shortage Impact Following Record Apple Q1 2026 Earnings
Apple CEO Tim Cook highlighted memory shortages during Q1 2026, with RAM prices soaring 230%, pressuring margins. Apple posted USD 143.8B revenue, up 16% YoY, and projects 13–16% growth next quarter. Teams are negotiating long-term RAM deals in South Korea, while Services revenue hits USD 30B, cushioning rising hardware costs.
Mumbai, January 30: Apple CEO Tim Cook has provided crucial insights into how the tech giant is navigating the ongoing global memory shortage during the company’s Q1 2026 earnings call. While rising prices for RAM and storage chips had a minimal effect on gross margins in the December quarter, Cook warned of a more significant impact in the coming months. The company reported a blockbuster quarter with USD 143.8 billion in revenue, marking a 16 per cent year-on-year increase, even as supply chain pressures intensify.
Cook noted that market pricing for memory is increasing significantly, forcing the Cupertino-based company to evaluate various strategic "levers" to mitigate costs. Despite these headwinds, Apple has projected a growth of 13 per cent to 16 per cent for the current quarter, with gross margins expected to remain healthy between 48 per cent and 49 per cent. Apple iPhone 18 Pro Leaks, Expected Specifications and Features.
Apple Supply Chain Strategies
To secure the essential LPDDR5X RAM required for future iPhone models, Apple’s purchasing teams have reportedly taken the unusual step of establishing extended stays in South Korea. Teams are currently stationed near Samsung and SK Hynix semiconductor plants in Hwaseong, attempting to negotiate long-term contracts spanning two to three years.
However, chipmakers are currently resisting these long-term deals. Both Samsung and SK Hynix are sticking to quarterly contracts, anticipating that memory prices will continue to climb through 2027. This shift has forced Apple to renegotiate prices every quarter, a significant departure from its traditional six-month intervals.
Global Memory Supply Constraint
The financial burden of memory components has surged over the past year. Industry data suggests that a 12GB memory module that cost Apple approximately USD 30 in early 2025 rose to nearly USD 70 by December 2025. This represents a 230 per cent increase in a critical component cost.
Memory now accounts for over 20 per cent of total smartphone production costs, up from 15 per cent in previous quarters. The shortage is exacerbated by the fact that major suppliers like SK Hynix and Micron have shifted their production focus toward high-bandwidth memory (HBM) to meet the massive demand for Artificial Intelligence applications, leaving a tighter supply for mobile-grade RAM.
Services Growth as Financial Cushion
Apple is increasingly relying on its Services division to offset the rising hardware production expenses. Revenue from services, including Apple Music, iCloud, and Apple TV, reached an all-time high of USD 30 billion last quarter, growing 14 per cent year-on-year. Apple AI Pin: Everything To Know About Upcoming Wearable Device Reportedly in Development.
Smartphone Component Pricing Trends
While Apple’s efficient iOS architecture allows it to use less RAM than many Android competitors, the sheer scale of the price hikes remains a challenge. When asked if these rising costs would lead to higher prices for consumers, Tim Cook declined to speculate, though analysts suggest the company’s high profit margins provide a temporary buffer against immediate retail price hikes.
(The above story first appeared on LatestLY on Jan 30, 2026 12:49 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).