Tim Cook calls memory chip costs 'unsustainable' as AI demand drives DRAM and NAND prices through the roof
The iPhone 18 Pro could cost $1,299 when it launches in September. That’s roughly $270 more than what comparable models have cost in the past, and the culprit isn’t some fancy new feature. It’s the chips inside.
Apple CEO Tim Cook told the Wall Street Journal on June 17 that “price increases are unavoidable,” describing the current memory chip situation as “unsustainable.” The global shortage of DRAM and NAND chips, fueled by an insatiable appetite from AI companies hoarding components for their data centers, has pushed Apple into a corner that even its legendary supply chain wizardry can’t fully escape.
The numbers behind the squeeze #
DRAM prices have surged up to 63%. NAND prices, the flash memory that stores your photos, apps, and everything else, have climbed as much as 75%. Both spikes are driven largely by AI hyperscalers, think the Microsofts and Googles of the world, who are buying up memory chips at a pace that leaves everyone else fighting over scraps.
TechInsights estimates that the component cost for a base iPhone 18 Pro could land around $726. For context, the equivalent cost for the iPhone 17 Pro was roughly $582. That’s a $144 jump in raw materials alone, before Apple even thinks about assembly, software, marketing, or the retail experience.
To maintain something close to a 44% gross margin, the math points to a starting price of $1,299. If Apple layers on additional camera upgrades that have been rumored for the Pro line, that number could stretch to $1,399.
The global memory supply shortage isn’t new. It’s been a persistent headache since 2024, with forecasts showing wafer supply trailing demand by approximately 20%.
Why AI is eating your phone budget #
Apple does have long-term supply agreements that give it some insulation. The company buys components at a scale that few competitors can match, which historically has given it significant leverage with suppliers like Samsung, SK Hynix, and Micron. Some analysts remain cautiously optimistic that Apple could employ a more aggressive pricing strategy and keep the base iPhone 18 Pro closer to $1,099.
What this means for investors and the broader market #
Competitors across the smartphone industry have already started raising prices on their devices in response to the same component cost pressures. Samsung, which both makes memory chips and buys them for its own phones, is dealing with its own version of this tension.
Cook’s public acknowledgment of the pricing pressure is itself notable. Apple typically doesn’t telegraph pricing moves months before a product launch. The fact that Cook is setting expectations now suggests the company wants to avoid sticker shock in September and is framing the increase as an industry-wide reality rather than an Apple-specific decision.
“Price increases are unavoidable.”
If the $1,299 number holds, it would represent a meaningful bump in ASP that could partially offset any decline in unit sales. The memory shortage also creates a secondary risk worth monitoring: if Apple can’t secure enough chips at any price, it could face supply constraints that limit how many units it can build in the critical holiday quarter. A 20% supply shortfall doesn’t resolve quickly. New fabrication capacity takes years to come online, and demand from AI workloads shows no sign of slowing.
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