Apple Inc. (AAPL) is preparing to raise prices on its products, citing a sharp increase in memory and storage chip costs that is squeezing profit margins. Chief Executive Tim Cook described the impending price hikes as “unavoidable,” marking a direct link between the booming artificial intelligence sector and consumer electronics pricing.
Cook’s comments, reported by Reuters, come as the memory chip market experiences a dramatic supply crunch. The demand for high-bandwidth memory (HBM), used in AI accelerators, has surged, diverting production capacity away from conventional DRAM and NAND flash chips. TrendForce forecasts that contract prices for conventional DRAM will jump 58% to 63% quarter-on-quarter in the second quarter of 2026, while NAND flash prices are expected to rise even more sharply, by 70% to 75%.
Micron Technology Inc. (MU) shares soared to a record close of $1,133.99 on Thursday, up $89.41, as investors bet the memory shortage will give suppliers greater pricing power. The stock notched its 35th record close of the year, pushing its market capitalization to approximately $1.3 trillion, according to Barron’s. The rally was fueled less by Apple’s specific demand than by the signal that a major, steady buyer is now confirming the tight supply is reaching end markets.
Deutsche Bank analyst Melissa Weathers raised her price target on Micron to $1,500 from $1,000, maintaining a Buy rating. Weathers told clients the supply-demand imbalance could persist “well into 2028,” reinforcing the view that memory has become a scarce infrastructure asset in the AI era.
SanDisk Corp. (SNDK) jumped $228.27 to $2,184.75, and Western Digital Corp. (WDC) added $34.58 to $746.23 in U.S. trading. U.S. markets were closed Friday for the Juneteenth holiday. South Korea’s Samsung Electronics Co. Ltd. (SSNLF) and SK Hynix Inc. also benefit from the AI-driven demand eating into overall memory supply.
Apple faces a different calculus. While cloud buyers can treat memory purchases as long-term investments, Apple sees the cost increases hit its margins directly on iPhones, Macs, and iPads. Cook did not specify which products will see price increases, nor did he provide a timeline or magnitude for the hikes. He pointed to DRAM as a primary concern, noting that more supply is being diverted to high-bandwidth memory for AI servers.
The broader consumer electronics market is under pressure. Counterpoint Research projects global smartphone shipments could decline 13.9% this year to 1.08 billion units, the largest yearly drop on record. Lower-end phones are expected to be hit hardest, as rising memory costs make them more difficult to build profitably. Apple and Samsung may fare better, but expensive phones are still slowing upgrade cycles.
Apple’s financial health remains robust. For the March quarter, revenue reached $111.2 billion, up 17% year-over-year, while diluted earnings per share rose 22% to $2.01. The company also approved an additional $100 billion for stock buybacks. However, the warning on pricing underscores the growing cost pressures from AI-related components.
Micron is scheduled to report fiscal third-quarter earnings on June 24. CEO Sanjay Mehrotra has consistently described memory as “a strategic asset” in recent investor materials, a view that is gaining traction as the AI boom reshapes the semiconductor landscape.
