Apple faces unprecedented memory cost increases as RAM prices keep surging, with its manufacturing bill climbing by $33 billion, while Samsung, SK hynix and Micron prioritise higher-margin server products amid strong AI data center demand for memory.

Apple is about to feel the squeeze from rising memory prices, with the cost of RAM climbing just as the company heads into its busiest shopping season. According to Reuters, Apple expects to pay more for memory in the December quarter. CEO John Ternus described the current price increases as "unprecedented." The company has so far managed to soften the blow by using memory bought at lower prices, cutting costs elsewhere, and raising prices on some products. However, its manufacturing bill has reportedly climbed by $33 billion in just a few months.

That cushion is getting thinner, and Apple expects memory purchases to become even more expensive into 2027. Ternus said during Apple's November 2 earnings call: "What we're seeing with memory pricing right now is unprecedented. And as we said earlier in the September quarter, we did see higher memory costs as compared to the June quarter, which were partly offset by the benefit of carrying inventory and lower costs on certain non-memory components. Now for the December quarter, we expect even higher memory costs, partly offset by a few factors. So as you know, we changed the price on many of our products, including Mac and iPad at the end of June and iPhone in September, and these price increases provided some offset."

Memory is used across Apple's hardware lineup, so sustained price increases could affect manufacturing costs for several product categories, although Apple has not announced another round of price increases. Absorbing higher component costs could, however, become indefinitely difficult. Dave Nicholson, Chief Research Officer at the Futurum Group, also identified memory prices as a growing pressure point for Apple's margins and hardware pricing through the holiday season and into 2027. He said that even with demand holding up, the key question is how much of those higher costs consumers will absorb. Apple is in a different position from companies pouring hundreds of billions of dollars into AI data center infrastructure, he added, because the impact of higher component costs is easier to quantify than the long-term returns on massive AI capital expenditure.

Warnings from Apple's suppliers suggest the cost pressure is unlikely to ease quickly. Last month, Samsung, a major supplier of DRAM, NAND flash storage and OLED displays for Apple, said memory demand would far exceed supply as AI infrastructure continues to expand. Its memory division reported a quarter-on-quarter increase in DRAM average prices during the third quarter, while NAND prices rose by high-teen percentages. A senior executive vice president of its memory business warned that the supply crunch could extend to 2028 and beyond. SK Hynix delivered a similar warning, saying it had secured long-term agreements covering more than half of its production capacity for 2027 and 2028. Micron, the third major memory supplier for Apple alongside Samsung and SK Hynix, is also benefiting from surging demand. Its latest published outlook warns that supply shortages in memory and storage could take "considerable time" to improve.

The pressure on Apple has been building for some time. In January, the company was already scrambling to secure memory supplies amid strong demand, and then-CEO Tim Cook warned that rising prices could have a greater impact on earnings. By June, rising component expenses had translated into higher retail prices. Apple increased prices across several Mac and iPad models, including a $400 increase to the starting price of the MacBook Pro, due to the RAM crisis. In July, Cook described the memory market as a "hundred-year flood" and said Apple expected to pay more for memory in the September quarter. The company also increased its inventory to $11.09 billion as it built a buffer against supply and price pressures.