Apple Shares Fall as Memory Chip Costs Pressure Margins
Apple Inc. shares dropped 4 percent after CEO John Ternus warned that unprecedented memory chip price hikes are eroding profit margins.
Shares of Apple Inc. fell approximately 4 percent on November 3 following a warning that soaring memory chip prices are pressuring profit margins. The price surge is driven by the AI industry's data-center expansion, which has absorbed chip supplies and impacted the consumer electronics market.
CEO John Ternus described current memory pricing as "unprecedented" and expects costs to increase further during the December quarter. These headwinds, combined with the rollout of an AI-powered Siri, contributed to a gross margin drop to 47.9 percent in the September quarter. The company projects margins will decline further to between 45 percent and 46 percent in the December quarter.
To mitigate these costs, Apple has raised product prices and increased manufacturing purchase obligations to $89.7 billion. Despite the margin pressure, the company beat fourth-quarter sales estimates due to strong demand for the iPhone 18 Pro.
