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Apple Says Memory Costs Will Squeeze December Margins

Apple expects gross margin to fall in the December quarter as rising memory prices and Siri AI cloud costs increase pressure on its hardware business.

Apple Says Memory Costs Will Squeeze December Margins
Priya Sharma
By Priya Sharma Phones, Tablets & Cameras EditorPublished

What you need to know

  • Apple expects December gross margin of 45%-46%, down from 47.9% in its September quarter.
  • Higher memory costs and Siri AI cloud spending are behind the forecast decline.
  • Apple expects Mac and iPad constraints, while the iPhone Duo is already supply-constrained.

Apple has warned that soaring memory prices will cut into its margins during the crucial December quarter, despite the company reporting record revenue in results released on 2 November.

The company expects gross margin of 45% to 46% for the quarter ending in December, down from 47.9% in the quarter ended 26 September. Apple said higher memory costs and cloud costs associated with rolling out Siri AI would be the main causes of the decline.

Apple reported September-quarter revenue of $114.5bn, up 12% year on year, and net income of $30.71bn. Its iPhone revenue reached roughly $57.6bn, helped by sales of the iPhone 18 Pro and iPhone 18 Pro Max.

Memory prices are rising further

Chief executive John Ternus said Apple had already felt the effect of pricier memory in the September quarter, although inventory bought at lower prices and lower costs for some non-memory components softened the impact.

“What we're seeing with memory pricing right now is unprecedented.”

Ternus said memory-purchase prices were expected to keep climbing beyond December. Apple has changed prices on many products, including Mac and iPad at the end of June and iPhone in September, which it said provided some offset to component costs.

Apple did not announce a new UK iPhone price increase alongside its results. Its current UK range already starts at £1,199 for the iPhone 18 Pro, £1,299 for the iPhone 18 Pro Max and £1,999 for the iPhone Duo foldable.

Supply pressure remains

Apple said iPhone, Mac and iPad supply was constrained in the September quarter, chiefly because of demand and availability for advanced semiconductor manufacturing nodes. It expects Mac and iPad constraints in the December quarter, driven by memory availability and stronger-than-expected demand.

The iPhone Duo, which went on sale in the UK on 23 October from £1,999, was already supply-constrained at the time of the earnings call. Apple said it could not predict when supply and demand would come into balance.

For buyers, the immediate message is less about a confirmed new price rise than availability and value. Apple’s current iPhone 17 starts at £899 on its UK store, compared with £799 at launch in 2025, while the company says memory costs are still increasing. That leaves little reason to expect broad price cuts soon, and could make sought-after Macs, iPads and the Duo harder to find over Christmas.

Why it matters

UK buyers should not assume newer or older Apple hardware will become cheaper soon. Apple has already raised prices on products including iPhones, and says its cheaper memory inventory is running down. No further UK iPhone price rise was announced on 2 November, but constrained Mac and iPad supply could make Christmas availability tighter.

Sources: Apple Newsroom · Stock Analysis · Apple UK Newsroom · US Securities and Exchange Commission
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