Apple Sees Rising Memory Costs Affecting Profits
SEOUL, Jan 29 (Reuters) – Apple said rising memory chip prices are starting to pressure its profits this quarter, echoing warnings from South Korean chipmakers that are shifting production toward higher-margin memory chips for AI workloads.
“We continue to see market pricing for memory increasing significantly,” Apple CEO Tim Cook said on Thursday during an earnings call when asked about how the shortage is affecting the company’s production plans for the year.
While Cook noted that the memory shortage had only a “minimal impact” in the holiday quarter ending December 31, which is typically Apple’s strongest sales period, he expects it will affect the current quarter more. Demand for memory chips is rising as sales of the new iPhone 17 surge, especially in China and India. Cook described the demand for the device in the December quarter as “staggering” but did not comment on whether Apple might raise prices due to the chip shortage.
South Korean Chipmakers Warn of DRAM Shortage
Samsung Electronics and SK Hynix, which together control about two-thirds of the DRAM chip market and supply companies like Apple, have warned that computer and smartphone makers will face growing pressure from a shortage of DRAM chips. This shortage is causing margin pressure and could disrupt supply chains.
The push to build AI infrastructure has led chipmakers to prioritize high-bandwidth memory (HBM) for AI servers, reducing the supply of conventional DRAM chips. The shortage is worsened by cautious production expansion after aggressive capacity growth following 2017, leaving chipmakers less willing to add new production lines. Samsung said production expansion will remain limited in 2026 and 2027.
As the shortage continues, some manufacturers are adjusting their products to cope with higher prices.
“Due to a recent surge in memory chip prices, PC and mobile customers are adjusting purchase volumes,” SK Hynix said during its earnings call on Thursday. “Some customers are taking a more conservative approach to shipment plans or considering adjusting memory specifications in price-sensitive products.”
Research firms IDC and Counterpoint now expect global smartphone sales to shrink by at least 2% this year, reversing earlier growth forecasts. The PC market is also expected to shrink by at least 4.9% in 2026, after growing 8.1% last year, IDC estimated.
Chipmakers Prioritize AI Demand
Samsung, the world’s second-largest smartphone maker, is also preparing for the impact of the chip shortage. Its mobile business profit fell 10% in the fourth quarter.
Cho Seong, a Samsung mobile executive, warned on Thursday of a “challenging year” in 2026, with flat global smartphone shipments and risks of downward adjustments due to memory chip prices.
“PC and mobile customers are having difficulties securing memory supplies, as they are being affected directly and indirectly by supply constraints and strong demand for server-related products,” said Park Joon Deok, head of DRAM marketing at SK Hynix, on the company’s earnings call.
Samsung prioritized supplying memory to server customers in the fourth quarter and plans to continue increasing AI-related product shipments. This could further limit the availability of conventional memory chips.
Samsung’s focus on AI memory chips comes as it aims to close the market share gap with SK Hynix in the growing segment. SK Hynix, a major chip supplier for Nvidia, led the HBM chip market last year with a 61% share, followed by Samsung at 19% and Micron at 20%, according to Macquarie Equity Research.
HBM chips are essential for building AI chipsets.
