Apple is expecting memory costs to continue rising in the coming months, raising uncertainty about whether the company could increase the prices of its iPhones, MacBooks and iPads again. During Apple’s earnings call on October 2, Apple COO Sabih Khan avoided giving a direct answer when an analyst asked about another price hike. However, CEO John Ternus and CFO Kevan Parekh shared details about how the company plans to manage rising memory costs. Apple CEO John Ternus said Apple is facing an “unprecedented” increase in memory prices. The company saw higher memory costs in the September quarter and expects the situation to get worse in the December quarter. Apple also expects memory prices to continue rising beyond December.What we’re seeing with memory pricing right now is unprecedented,” said Ternus. He said Apple saw higher memory costs in the September quarter, and the December quarter will be worse. “Looking beyond the December quarter, we see the pricing for memory purchases continuing to increase,” he said.
What did Apple COO Sabih Khan say about another price hike
During the earnings call, an analyst asked whether Apple could increase the prices of its products again to deal with rising memory costs. Khan, who took the question, did not provide a direct answer.Apple CFO Kevan Parekh said the company had made its recent price increases “reluctantly” and was trying to balance their impact. “I think what we try to do is evaluate, and in doing that, we evaluate the unit’s revenue margin, and we’re really being thoughtful and deliberate at evaluating kind of the short-term and long-term considerations. And we really believe we’re balancing this well”.
Apple expects a declining benefit from pre-purchasing memory over time
Apple managed to offset some of the higher memory costs in the September quarter by using memory purchased earlier at lower prices. It also secured lower prices for some non-memory components. The company expects these measures to help cover part of the increase in memory costs during the December quarter. Apple also pointed to price increases across iPhones, iPads and Macs in June and September as factors that could help manage the pressure.However, Ternus said the benefit of buying memory in advance is expected to decline over time.Apple’s inventory more than doubled year over year to $14.5 billion. Ternus also said the company’s manufacturing purchase obligations increased by $33 billion between the June and September quarters.The iPhone-maker expects its gross margin to fall from 47.9% in the September quarter to between 45% and 46% in the December quarter. The company said higher memory costs and some Siri AI-related costs are expected to contribute to the decline.
The iPhone, MacBook and iPad price hike question Apple COO Sabih Khan ‘skipped’, and what Apple said about another increase
Apple is expecting memory costs to continue rising in the coming months, raising uncertainty about whether the company could increase the prices of its iPhones, MacBooks and iPads again. During Apple’s earnings call on October 2, Apple COO Sabih Khan avoided giving a direct answer when an analyst asked about another price hike. However, CEO John Ternus and CFO Kevan Parekh shared details about how the company plans to manage rising memory costs. Apple CEO John Ternus said Apple is facing an “unprecedented” increase in memory prices. The company saw higher memory costs in the September quarter and expects the situation to get worse in the December quarter. Apple also expects memory prices to continue rising beyond December.What we’re seeing with memory pricing right now is unprecedented,” said Ternus. He said Apple saw higher memory costs in the September quarter, and the December quarter will be worse. “Looking beyond the December quarter, we see the pricing for memory purchases continuing to increase,” he said.
What did Apple COO Sabih Khan say about another price hike
During the earnings call, an analyst asked whether Apple could increase the prices of its products again to deal with rising memory costs. Khan, who took the question, did not provide a direct answer.Apple CFO Kevan Parekh said the company had made its recent price increases “reluctantly” and was trying to balance their impact. “I think what we try to do is evaluate, and in doing that, we evaluate the unit’s revenue margin, and we’re really being thoughtful and deliberate at evaluating kind of the short-term and long-term considerations. And we really believe we’re balancing this well”.
Apple expects a declining benefit from pre-purchasing memory over time
Apple managed to offset some of the higher memory costs in the September quarter by using memory purchased earlier at lower prices. It also secured lower prices for some non-memory components. The company expects these measures to help cover part of the increase in memory costs during the December quarter. Apple also pointed to price increases across iPhones, iPads and Macs in June and September as factors that could help manage the pressure.However, Ternus said the benefit of buying memory in advance is expected to decline over time.Apple’s inventory more than doubled year over year to $14.5 billion. Ternus also said the company’s manufacturing purchase obligations increased by $33 billion between the June and September quarters.The iPhone-maker expects its gross margin to fall from 47.9% in the September quarter to between 45% and 46% in the December quarter. The company said higher memory costs and some Siri AI-related costs are expected to contribute to the decline.