Apple Products Going Up in Price Is 'Unavoidable', Tim Cook Says

Apple Products Going Up in Price Is 'Unavoidable', Tim Cook Says https://ift.tt/xKhRspX

The price increase comes after the AI boom has made memory and storage chips significantly more expensive

Apple CEO Tim Cook
Credit: Josh Edelson / AFP via Getty

NEED TO KNOW

• Apple plans to raise prices due to soaring memory and storage chip costs driven by AI demand
• CEO Tim Cook says the company has tried to shield customers but rising costs have become unsustainable
• Analysts note AI companies are locking in chip supplies, making it harder for consumer electronics makers to compete

Apple plans to raise the prices of some of its products and artificial intelligence might be to blame.

The announcement comes after soaring memory and storage chip costs began to put increasing pressure on the company's margins, CEO Tim Cook said in a recent interview.

“Unfortunately, price increases are unavoidable,” Cook, 65, said in an interview with The Wall Street Journal published Wednesday, June 17. 

Apple's expected price hikes come as a shortage of memory chips drives up costs. Growing demand from AI companies has reduced the supply available for consumer electronics makers.

Since last year, as Google, Microsoft, Meta and Amazon increased their capital spending budgets, the price for storage and memory chips quadrupled, the WSJ reported.

While speaking with the WSJ, Cook said Apple has tried to shield customers from rising prices, but “the situation has become unsustainable.”

The issue comes as Apple expands its AI offerings, which require more memory to operate. That means future iPhones, iPads and Macs will need additional chips at a time when supplies are already tight. The company is also preparing for major product launches later this year.

If memory costs continue to climb, experts say Apple could increase prices on premium products to protect its profits. 

“There's less supply at a time when consumers want devices and the memory guys are passing along huge price increases,” Cook told the WSJ. “We definitely need memory pricing and supply to return to reasonable levels for consumer products. That's the bottom line.”

The move would mark a change for Apple, which has long relied on its size and supplier relationships to avoid raising prices when component costs increase.

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Analysts note that AI companies are locking in chip supplies with multi-year deals and significant cash commitments, making it harder for others to compete. Cook also ruled out Apple building its own memory factories, telling the outlet, “We can't do everything. We know what we're good at.”

Cook declined to tell the WSJ any details on timing, which products would be affected or the amount they'd go up in price.