Apple Warns Gross Margin Drops to 45% on Memory Price Surge
Apple CEO John Ternus warned that surging memory chip prices, driven by data-center demand, will reduce holiday-quarter gross margins from 48% to 45%. Despite revenue growth, rising hardware costs and Siri AI cloud inference expenses are eroding profits, with inventory buffers fading.
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Rohan Paul (@rohanpaul_ai) · 2026-11-04 17
FT: Apple warned its holiday-quarter gross margin will slide to 45% (from Sept-quarter gross margin of 48%) as memory chip prices surge.
Data-centre builders are soaking up supply from a few memory makers, so Apple pays for the AI boom through component bills.
John Ternus, in his first earnings call as chief executive, called the pricing “unprecedented” and expects costs to keep rising beyond December.
Excluding tariff refunds, memory alone cut September-quarter gross margin by about 1 point from June, even as revenue rose 12% to $114.5B.
Price rises across Macs, iPads and iPhones, plus memory bought earlier, softened the blow, though Apple expects that stockpile benefit to fade.
Siri AI adds a second drag, since its cloud inference costs hit services margins and more device revenue gets booked over each product’s lifetime.
Budget phone makers fare worse: global smartphone shipments fell 20% last quarter while Apple’s share rose from 18% to 22%.
