Apple (AAPL) Loss of profit was clearly chosen over price shock.
Memory prices continue to surge due to strong demand from artificial intelligence data centers, but Apple wants to avoid raising iPhone prices even if it means taking a hit to profits.
Analyst Ming-Chi Kuo, a veteran of Apple’s supply chain, said the tech giant will stick to their approach when launching highly anticipated products. iPhone 18at least for now.
The key decision puts Apple’s supply chain strength under scanner as it moves into profitability. Thursday, January 29, 2026 (after market close).
After covering the memory space extensively over the past few months, it’s clear that vendors have a lot of leverage for the foreseeable future.
Leaders in space, e.g. Micronmassive fabs are being built to ease supply constraints, but most of these efforts are long-term, suggesting trouble is likely for at least the next few years.
Of course, most hardware companies have no choice but to raise prices, but Apple is no ordinary hardware company.
Apple’s ability to withstand shocks and weather them better than any other hardware company in history has the potential to be its greatest advantage in the memory crunch.
Apple plans to keep iPhone 18 prices stable despite rising memory costs putting pressure on near-term marginsPhoto by Axelle/Bauer-Griffin on Getty Images · Photo by Axelle/Bauer-Griffin on Getty Images
according to Tianfeng International Securities Analyst Ming-Chi Kuo said Apple hopes to respond with higher memory costs rather than risk the iPhone pricing boat.
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Kuo’s interpretation is that Apple sensed an opportunity to effectively leverage its scale and vast supply chain strength.
In a post on X, Kuo acknowledged that higher memory costs will impact iPhone gross margins. However, we go on to say,
Kuo boiled down Apple’s thinking to three key initiatives.
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Now absorb the pain: Memory prices are rising at an incredible rate, and Apple is choosing to endure profit pressure rather than consumer backlash.
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Lock supply: Apple’s scale allows it to efficiently obtain parts that other companies cannot, even as shortages become more severe.
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Play the long game: Any near-term margin decline will be viewed as temporary, with services revenue likely to recover over time.
However, there is a significant risk that these pressures will not be contained, as Kuo noted that iPhone memory prices are still renegotiated quarterly rather than biannually.
