Apple has attempted to shield customers from memory and storage chip price increases, but it has “become unsustainable.” Price change timing hasn’t been shared.
One of the most predictable parts of Apple is its price structure. It’s basically a feature of the product, so price changes are very rare and heavily considered.
In an interview with The Wall Street Journal, Apple CEO Tim Cook says that product prices will have to increase to account for chip shortages. While the company has worked its usual supply chain magic to mitigate costs, things have exceeded its ability to shield customers.
“Unfortunately, price increases are unavoidable,” Cook said in the interview. “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, but the situation has become unsustainable.”
Nothing was shared about which products might see price increases, how much, or when, but it is clear that it is happening. Apple is ready to invest its extra cash reserves into building out partner capacity, but it isn’t trying to build its own fabs.
“There’s less supply at a time when consumers want devices and the memory guys are passing along huge price increases,” Cook commented. “We definitely need memory pricing and supply to return to reasonable levels for consumer products. That’s the bottom line.”
He later likened the price changes in recent years to a 100-year flood. Cook has never seen anything like this in his 40-year career.
Apple also isn’t counting out government and regulatory interference. One example could be loosening the restrictions on working with Chinese chip fabs, which currently require special approval.
Apple has levers to pull
The Wall Street Journal took a stab at guessing how much a price-inflated iPhone 18 Pro might cost, and it ended up at a $200 price increase. So, a starting price of $1,299 in September isn’t out of the question.
However, given the popularity of the iPhone, Apple may continue to shield customers from price increases at the lower end. It would do this by charging more for storage increases while keeping the base price the same.
Also, Apple could reduce the need to increase iPhone pricing by increasing prices elsewhere. New Apple TV and home products are expected soon, and some Macs still need M5 processors.
There are a lot of opportunities for Apple to balance the books without pricing out customers. Time will tell what move Apple makes.
Perhaps, if we’re lucky, this AI bubble will finally pop, or at least deflate enough, that prices get back to reasonable levels. There’s still time for things to normalize before the September iPhone event.
Source: www.appleinsider.com
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