Apple CEO Tim Cook has acknowledged that iPhone price increases are now unavoidable due to skyrocketing costs for memory and storage chips, driven by the artificial intelligence boom.
In an interview with The Wall Street Journal, Cook said Apple had been absorbing rising component costs for as long as possible but has reached a breaking point.
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“We’re doing our best to mitigate the huge increases that are being passed to us, and we’ve been trying to shield our customers from the increases,” Cook said, adding that the situation has become unsustainable.
The main culprit is fierce competition for DRAM and NAND chips.
Major AI players like Google, Microsoft, Meta, and Amazon are buying large quantities of high-bandwidth memory for data centers, causing prices for both memory and storage chips to quadruple since last year.
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Suppliers such as Samsung, SK Hynix, and Micron are prioritizing lucrative AI contracts, leaving fewer chips for consumer electronics and creating shortages that could persist into 2027.
Analysts at TechInsights estimate that the rising costs could add around $270 to the price of a future iPhone Pro model.
Cook did not specify which products or when the hikes might occur, but Macs and iPads could see changes sooner.
Apple already raised the starting price of the Mac Mini as an early signal.
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All eyes are on the upcoming iPhone 18 series and Apple's first foldable iPhone, expected in September.
Cook described the situation as a “hundred-year flood,” unlike anything he has seen in his decades of supply chain experience.
He expressed hope that memory pricing and supply will eventually stabilize for consumer products and noted that Apple might use its strong balance sheet to secure more capacity.
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However, competing with multi-year, high-prepayment AI contracts remains a challenge.
