Will Your Next iPhone Cost More? Cook Admits: Memory Chips Are Too Expensive

TradingKey - Faced with the continuous rise in memory and flash storage costs, Apple ( AAPL) has also begun to soften its pricing defense.

According to The Wall Street Journal, Apple CEO Tim Cook candidly admitted in an interview that as memory and flash storage prices continue to climb, it is increasingly difficult for the company to fully absorb these costs, making future product price hikes "inevitable."

"We have been doing our best to absorb the cost pressures passed down from upstream and have worked hard to protect consumers from the impact of price hikes, but this situation has become unsustainable," Cook said. However, Apple has not yet decided on the specific timing, magnitude, or products affected by the price increases, merely emphasizing that this is an unavoidable move given the broader industry environment.

Evercore ISI analyst Amit Daryanani stated that Apple may begin raising prices on its high-end products starting with the iPhone 18 Pro series to be launched this autumn, with the base model price potentially increasing by $100, while the price hikes for higher storage tiers will be even more pronounced.

Notably, this is not the first time Apple has faced cost pressures. In March of this year, Apple raised the prices of its new MacBook series due to memory shortages, with increases ranging from $100 to $400. At the time, the company did not directly mention memory costs, instead explaining the price adjustment as a "configuration upgrade."

Meanwhile, Apple is also accelerating its product lineup. The second-generation ultra-thin iPhone Air has entered advanced testing stages and is planned for release in the spring of 2027. By upgrading the camera and battery life to boost product appeal, Apple aims to offset the market impact of price hikes through innovation.

A supply-demand imbalance unseen in forty years

Apple CEO Tim Cook made no secret of the fact that this is the most severe supply-demand imbalance he has seen in his more than 40 years in the electronics industry.

"While consumer demand for our products remains strong, available memory supply is shrinking, and memory makers are passing along massive cost increases," Cook said. "We urgently need memory prices and supply to return to levels that are reasonable for consumer products; that is the core of the issue."

Since 2025, as tech giants such as Google ( GOOGL ), Microsoft ( MSFT ), Meta ( META ), and Amazon ( AMZN) announced massive increases in capital expenditures, demand for data centers to build AI servers has exploded, directly causing the prices of memory chips (DRAM) and storage chips (NAND) to quadruple in just 18 months.

Authoritative market research firm TechInsights predicts that this upward trend will persist until at least 2027, casting a shadow over the future of the consumer electronics industry.

Cook used a vivid analogy: memory (DRAM) is like a mid-20th century office desk, on which the various files needed for employees to complete their tasks are placed, while storage (NAND) is like a filing cabinet used to store all other materials.

Smartphones use DRAM to run apps currently in use, while relying on NAND to store photos and videos. In the AI era, the scale and nature of this demand have changed fundamentally: each AI server requires 8 to 16 times the DRAM capacity of a standard server, directly squeezing the chip supply for consumer electronics.

Currently, the global DRAM market is dominated by three players: South Korea's Samsung Electronics and SK Hynix, and the U.S.-based Micron Technology. In addition to these three, NAND flash memory chip manufacturers also include Japan's Kioxia and SanDisk of the U.S.

Although major memory manufacturers are accelerating capacity expansions—Morgan Stanley ( MS) projects that DRAM wafer capacity will grow by 30% by 2027—since priority is given to meeting the demands of AI server customers, Morgan Stanley estimates there will be a supply shortfall of up to 15% in wafers destined for consumer electronics.

In the interview, Cook revealed several measures Apple is taking to address the crisis. He stated that Apple is willing to tap its cash reserves to help ease the memory supply bottleneck, saying, "We are willing to use our balance sheet to help solve the problem," while making it clear that Apple has no plans to use its cash and chip technology to build its own memory and storage factories. "Obviously, more capacity is still needed," Cook added.

Apple spends tens of billions of dollars annually on memory and storage chips, making it one of the world's largest buyers. In the past, Apple leveraged its massive purchasing scale to pressure suppliers, driving down prices by playing suppliers against each other, which severely squeezed suppliers' profit margins.

However, as artificial intelligence companies flock into the market, Apple now also has to wait in line for supply.

Second-generation iPhone Air to launch next spring

Furthermore, according to the latest reports, the second-generation iPhone Air prototype, codenamed V62, has entered advanced stages of Apple's internal testing. This model, which once stunned the market with its ultra-thin and lightweight design, is set to undergo its first major upgrade since inception and is scheduled for an official launch in the spring of 2027.

Debuting in September 2025, the iPhone Air quickly became a new favorite in Apple's product matrix, leveraging its $999 price tag and industry-leading slim chassis. Although its sales performance surpassed that of the previously lackluster mini and Plus models, it has not yet joined the ranks of Apple's top-selling products.

This market performance has also given Apple room to slow the refresh cycle of the Air series, with the interval between the first- and second-generation Air releases stretching to about a year and a half. However, according to people familiar with the matter, the final timeline and specifications could still be adjusted based on market feedback, and an Apple spokesperson declined to comment.

For the upcoming second-generation iPhone Air, the most significant changes will focus on the camera system and battery life—the two areas with the most concentrated user feedback.

According to internal testing information, the new model will upgrade from the current single-camera design to a dual-camera system. The newly added second camera will support ultra-wide shooting, an improvement that will directly boost the competitiveness of the Air series in photography and video recording.

In fact, the single-camera configuration has always been one of the main shortcomings of the current Air, with many users having to sacrifice their photography experience in pursuit of a slim design; this upgrade will effectively remedy that shortcoming.

In terms of battery life, Apple is facing the challenge of balancing a slim chassis with battery endurance. The current Air won market favor with its ultra-thin design, but was forced to compromise on battery capacity as a result.

The second-generation Air will retain the current ultra-thin appearance, but Apple engineers are exploring multiple technical paths to improve battery performance. It remains unclear whether the battery life improvements will stem from an ingenious layout of a larger-capacity battery or from gains in energy efficiency. Whichever path is taken, it will represent a rigorous test of Apple's industrial design capabilities.