Apple stockpiles inventory as it braces for ‘significant supply constraints’

As the generative AI boom drives steep demand for hardware components, Apple and other hardware makers are facing what outgoing CEO Tim Cook calls “a hundred-year flood [on] memory pricing,” severely impacting the cost of producing iPhones, MacBooks, and other devices. Apple described its recent earnings report as its “strongest June quarter ever,” with iPhone and Mac sales performing better than expected—growing 22% and 29%, respectively, year-over-year. Yet the company is bracing for memory shortages, known as RAMageddon, to intensify further. Apple’s biggest challenge is securing the advanced memory nodes used in its Apple silicon chips, which power the A-Series and M-Series processors in iPhones and Macs. “We continue to expect high levels of demand. However, with less flexibility in supply chain, we expect the impact from the supply constraints to increase significantly sequentially,” Cook said on Apple’s quarterly earnings call. “We’re seeing some very significant constraints currently with limited flexibility in the supply chain to remedy it.” Apple is evidently worried enough about supply shortages that it reported $11.1 billion in inventory, nearly double the $5.7 billion it reported last September. This marks a break from Cook’s long-held supply chain approach, which emphasized minimizing inventory on hand. These constraints led Apple to “reluctantly” raise the price of Macs and iPads last month, Cook added. Other companies that have raised hardware prices include Meta, Samsung, Microsoft, and Sony. “We’re going to be scrambling on the supply side, essentially,” Cook said. For the upcoming quarter, Apple is predicting revenue growth between 9% and 11% year-over-year. However, in previous quarters, Apple has maintained about 16% year-over-year growth. This discrepancy worries investors—Apple stock dropped 6% in after-hours trading. When Senior VP of Hardware Engineering John Ternus steps into the CEO role in September, the company could face a rough patch. At least Apple isn’t alone in its supply struggles.

via TechCrunch