Apple (NASDAQ:AAPL) announced price increases on MacBook and iPad models Thursday, citing sharp rises in memory and storage chip costs that the company says it can no longer absorb. The move, which adds $100 to $300 to select devices, leaves iPhone pricing untouched—a key point for investors given that iPhones accounted for over half of Apple's March-quarter sales.
The Cupertino, California-based technology giant raised prices on higher-volume devices. The MacBook Air with 512GB storage now retails for $1,299, up from $1,099, while the MacBook Pro with 1TB storage rose to $1,999 from $1,699. The 128GB iPad Air climbed to $749 from $599, and the iPad Pro jumped $200 to $1,199. The entry-level MacBook Neo moved to $699 from $599.
Shares of Apple fell 4.8% to $278.93 at the start of U.S. trading, a drop that exceeded the revenue share tied to the price-adjusted products. The decline reflects investor concern that the memory cost pressure could eventually spill over to iPhone pricing or margins, even as the current price pass-through is limited to smaller hardware categories.
Apple's product gross margin stood at 38.7% in the March quarter, up from 35.9% a year earlier, but the company warned that gross margins could face volatility and downward pressure going forward. The improvement was partly offset by higher component costs, according to the company's filings.
The cost surge is driven by DRAM (dynamic random-access memory) chips. Market research firm TrendForce reported that contract prices for conventional DRAM jumped 93% to 98% in the first quarter from the prior period, with another 58% to 63% increase expected in the second quarter. The group noted that PC and smartphone makers are facing tight supply as more new output is allocated to high-capacity server memory for artificial intelligence applications.
Micron Technology (NASDAQ:MU), a major memory supplier for Nvidia (NASDAQ:NVDA) AI systems, reported fiscal third-quarter revenue of $41.46 billion with a GAAP gross margin of 84.6%. CEO Sanjay Mehrotra said the quarter demonstrated "the strategic value of memory in the AI era." Reuters reported that customers secured $22 billion in supply commitments.
Apple CEO Tim Cook warned in April that "significantly higher memory costs" were coming, noting that after the June quarter, memory prices would have an "increasing impact" on Apple's business. The company's Mac and iPad sales generated $15.3 billion in the March quarter, or about 13.8% of total revenue of $111.2 billion. iPhone sales contributed $57.0 billion.
The price increase also affects Apple's competitive positioning. The MacBook Neo price hike eliminates the $100 lead it had over Dell Technologies' (NYSE:DELL) XPS 13, which Dell launched last month at $699. This could impact Apple's push into the low-end PC market.
Industry-wide demand remains weak. IDC forecasts global PC shipments will decline 11.3% in 2026, with smartphone shipments set to fall 13.9%—the steepest annual drop for smartphones on record. "The era of ultra cheap smartphones is over," said Nabila Popal, IDC's senior research director. Creative Strategies CEO Ben Bajarin described the memory market as "tough and remains structurally tough," adding that competitors might raise prices even more than Apple.
