As Tim Cook steps down, Apple hit record sales — but a chip shortage looms

Apple reported a document quarter on Thursday. But outgoing CEO Tim Cook warned of some gathering storm clouds within the type of reminiscence chip provide points that might affect enterprise within the close to future.

“As we speak Apple is proud to report our greatest March quarter ever, with income of $111.2 billion and double-digit development throughout each geographic section,” Cook dinner mentioned throughout Thursday’s earnings name. “iPhone achieved a March quarter income document, fueled by such extraordinary demand for the iPhone 17 lineup.”

Much less rosily, Cook dinner relayed that Apple spent extra on reminiscence chips in March than in earlier quarters, although the corporate’s prices had been offset by its capacity to promote stockpiled inventory. However, he warned, the expectation is “considerably greater reminiscence prices” in June and past — the likes of which can “drive an rising affect” on the enterprise.

Cook dinner was referencing what has generally been known as “RAMageddon,” the pattern of the AI business gulping up reminiscence chips with such astonishing gusto it’s spurring shortages. That is driving up the costs of {hardware}. Apple is primarily a {hardware} firm, in order that’s clearly not nice information for its core merchandise.

Most notably, the chip scarcity has impacted the iPhone. Regardless of the robust gross sales figures touted by Apple on Thursday, it has previously been reported that RAM prices have quadrupled — impacting cellphone manufacturing prices and placing John Ternus, Apple’s incoming CEO, in a less-than-enviable place.

One attainable outcome could also be that Apple increases prices for the iPhone. “There’s just a bit much less flexibility within the provide chain in the intervening time for getting extra components,” Cook told Reuters on Thursday.

Ternus, who has served as Apple’s senior vp of {hardware} engineering, was on Thursday’s earnings name and praised Cook dinner. “For my part, Tim is among the biggest enterprise leaders of all time. Moving into the function of CEO is an unimaginable honor, and it means an awesome deal to me to have Tim’s belief and confidence,” Ternus mentioned.

He’ll clearly have his work minimize out for him when he begins the job on September 1. However he’ll nonetheless have Cook dinner’s provide chain expertise to lean on for some time. Cook dinner will turn out to be govt chairman.