Apple warns memory costs are starting to bite as Samsung, SK Hynix prioritize AI chips

Apple has issued a warning regarding rising memory chip prices, which are beginning to pressure its profitability. This is part of a broader supply crunch as major chipmakers prioritize AI-related memory with higher margins. Apple CEO Tim Cook noted that the significant increase in memory prices is expected to have a greater impact in the current quarter, although the effect was minimal during the holiday period. Apple's demand for memory is growing due to the latest iPhone surge in China and India, but the company did not comment on potential product price increases. This warning is consistent with remarks from Samsung Electronics and SK Hynix, who dominate about two-thirds of the global DRAM market. Both have indicated worsening supply constraints as manufacturing is focused on high-bandwidth memory for AI servers. Past conservative investments have further restricted new supply. The ripple effects are impacting PC and smartphone manufacturers, who are facing margin pressure and potential disruptions. SK Hynix has observed customers cutting purchase volumes or lowering specifications. Market expectations indicate a possible 2% decline in global smartphone sales this year, with the PC market potentially shrinking by nearly 5% by 2026. Samsung has also cautioned about a challenging year ahead, with flat smartphone shipments likely as AI-driven memory demand continues to dominate the market.