Key facts
- Apple CEO Tim Cook confirmed a global memory chip shortage is impacting the company.
- The shortage is expected to increase costs and pressure Apple's profit margins.
- Demand for Apple's newest products, including the latest iPhone lineup, has been strong.
- Apple is in 'supply chase mode' due to lean inventory.
- Access to advanced chipmaking nodes for Apple's processors is a constraint.
- The broader tech industry is also grappling with a worsening memory chip shortage.
Apple is beginning to experience the effects of a global memory chip shortage, according to CEO Tim Cook. He stated on the company's first-quarter earnings call that rising prices for these critical components are expected to impact profit margins. This warning comes despite blockbuster demand for Apple's latest products, with iPhone revenue seeing a significant jump. Cook noted that the company is in 'supply chase mode' due to lean inventory and that access to advanced chipmaking nodes is a constraint. The memory shortage's impact on margins was minimal in the December quarter but is anticipated to grow, contributing to a forecasted gross margin range of 48% to 49% for the second quarter. The broader tech industry is also grappling with this shortage, as AI companies, smartphone makers, and PC manufacturers compete for limited memory components, driving up prices. Apple shares dropped 7% following the forecast. Cook is preparing to hand over leadership to John Ternus.