Apple expects lower holiday-quarter profit margins as memory chip costs climb

ASM, Philippine Canadian Inquirer
November 04, 2026

Photo courtesy: Reuters

Apple expects rising memory chip prices to cut into its profit margins during the holiday shopping season, even as strong iPhone sales help drive record revenue.

The company warned on Monday, November 2, that memory costs would continue climbing through December and beyond. Apple has already secured additional supplies to reduce the risk of shortages.

Apple expects its gross margin to fall to between 45% and 46% in the quarter ending in December, down from 47.9% in the previous quarter.

Gross margin measures how much revenue a company keeps after paying the direct costs of producing and selling its products.

During Apple’s earnings call, CEO John Ternus described the current memory pricing situation as “unprecedented.”

Memory chips are essential components in iPhones, iPads, and Mac computers. Higher prices make these devices more expensive to manufacture, putting pressure on Apple’s earnings.

The company has managed some of the increases by using memory chips purchased earlier at lower prices. It also raised prices on several products this year, helping offset higher production costs.

However, Apple expects those savings to shrink as its existing inventory runs low and new purchases reflect higher market prices.

To strengthen its supply chain, Apple increased its manufacturing purchase commitments by $33 billion between June and September.

The company has also warned that expenses related to expanding its artificial intelligence-powered Siri features will affect its December-quarter margins, although rising memory prices remain the main concern.

The warning follows a strong financial quarter for Apple.

The company reported $114.5 billion in revenue for the three months ending September 26, a 12% increase from the same period last year. Strong demand for the iPhone 18 Pro lineup helped lift sales.

Apple also reported record September-quarter iPhone revenue and an all-time high for its services business.

Despite those results, investors reacted cautiously to the company’s weaker profit outlook. Apple shares fell during Monday’s earnings call and came under further pressure in Tuesday’s trading.

Apple has not announced another round of product price increases in response to the latest memory cost projections.