The well-documented supply shortage of memory due to data center demand, which is leading to price spikes, will likely affect Apple’s (AAPL) iPhone gross margins in the short term.
However, the Cupertino company plans to avoid increasing prices on its upcoming iPhone 18, according to TF International Securities analyst Ming-Chi Kuo.
“Higher memory costs will hit iPhone gross margins,” Kuo said in a post on X Tuesday. “But Apple’s playbook is clear: use the market chaos to their advantage—secure the chips, absorb the costs, and grab more market share. They’ll make it back later on the services side.”
Industry observers will closely monitor what Apple might reveal about the memory shortage in its first quarter fiscal 2026 financial report, which will be released post-market on Thursday.
“What Apple says could actually shake up other industries’ stocks more than Apple’s own or its suppliers’,” Kuo said.
This is due to Apple’s leverage in the supply chain and its ability to guarantee supply.
“iPhone memory pricing is now negotiated quarterly instead of every six months, so expect another hike in 2Q26,” Kuo said. “Right now, the 2Q26 QoQ increase looks similar to 1Q26.”
As of now, Apple plans to avoid increasing prices as much as possible when it releases the iPhone 18 series this fall, Kuo added. Still, the rampant AI server buildout might not only affect memory prices but other components as well.
Jefferies estimates that memory prices jumped roughly 50% last quarter, reinforcing supplier leverage across the AI supply chain.