Apple warns ‘unprecedented’ memory chip costs will hit margins

{"text":[[{"start":9.24,"text":"Apple on Monday said the “unprecedented” rise in memory chip prices and the cost of serving its AI tools would squeeze its margins even as it forecast better than expected sales for the crucial Christmas season."}],[{"start":22.56,"text":"The iPhone maker said sales would rise between 7 and 10 per cent year on year in the final quarter of 2026, better than Wall Street forecasts of 6 per cent. But Apple’s shares slipped about 3 per cent after hours after it warned of rising component costs and gave a weaker outlook for its high-margin services business."}],[{"start":42.8,"text":"Apple predicted gross margins of 45 to 46 per cent in the fourth quarter of the year, less than analyst forecasts of 47 per cent."}],[{"start":51.88,"text":"Chief executive John Ternus pointed to the shortage of memory chips as the boom in data centre building hoovers up supply. “What we are seeing with memory pricing right now is unprecedented,” he said."}],[{"start":64.2,"text":"Apple sales held up in the three months to the end of September, the final quarter of the company’s financial year, with better than expected revenue of $114.5bn."}],[{"start":74.2,"text":"But despite a record fiscal year for Apple, investors were more focused on its financial outlook for the holiday season as consumers digest recent price increases and a rocky launch for the foldable iPhone Duo, which has seen long delivery delays and reports of cracks in its screen."}],[{"start":89.96,"text":"Apple insists the screen issues have affected only a limited number of devices."}],[{"start":null,"text":"

"}],[{"start":94.32,"text":"Monday’s earnings were also the first since Ternus, Apple’s former hardware boss, took over as CEO in September. He has taken the reins when Apple’s revenue growth is slowing from the robust pace set earlier in the year and as memory chip costs finally catch up with the consumer electronics group."}],[{"start":111.68,"text":"“I feel like it was a bit of a slow start for Ternus,” said Melissa Otto, head of research at S&P Global’s Visible Alpha. “The investment community is probably asking: Is this the best we can do for this level of valuation? Unfortunately, that happened to coincide with the new CEO’s first earnings call.”"}],[{"start":128.96,"text":"Otto also noted Apple’s robust sales projections for the Christmas quarter appeared to be “priced to perfection” given worsening economic conditions and consumers facing a higher cost of living."}],[{"start":139.96,"text":"Apple reported solid performance in the third quarter, with iPhone revenue rising 17 per cent to $57.6bn. Mac sales were better than expected at $10.8bn."}],[{"start":152.92,"text":"Revenue for Apple’s services business, which includes the App Store, Apple Pay and iCloud, was $31.6bn, in line with estimates. But it forecast services growth for the current quarter of between 8 and 9 per cent, well below the 12 per cent Wall Street expected. Net income was $30.7bn."}],[{"start":172.72,"text":"Sales in China were $17.5bn, up about 20 per cent but below estimates of $18.9bn. Chief financial officer Kevan Parekh blamed the softness in China on supply chain constraints that have limited its ability to deliver products to meet demand this year."}],[{"start":189.96,"text":"Gross margin was 47.9 per cent in the third quarter, compared with its previous forecast of 47-48 per cent."}],[{"start":197.44,"text":"Apple launched its new chatbot-style “Siri AI” voice assistant powered by Google’s models in September. But it noted the extra cloud computing costs to run the tool could also eat into its margins."}],[{"start":208.8,"text":"Apple’s results come after a sharp decline in tech stocks over the past week, with disappointing earnings from Google, Amazon and Intel triggering a sell-off and adding to concerns about unchecked AI spending."}],[{"start":220.56,"text":"The iPhone maker has defied the slump, with its shares climbing slightly over the past month ahead of Monday’s earnings report to hover around a $5tn market valuation as it vies with Nvidia for the title of the world’s most valuable public company."}],[{"start":null,"text":""}],[{"start":234.68,"text":"Unlike its Big Tech peers, Apple has not engaged in a massive spending spree on data centre infrastructure, making it a potential safe haven for investors wary of the AI trade."}],[{"start":245.24,"text":"But the Cupertino, California-based company is increasingly showing the strain from the global semiconductor component shortage, particularly for memory chips, where the rush to build data centres has placed intense pressure on a small number of suppliers."}],[{"start":259.32,"text":"Global smartphone shipments declined 20 per cent in the third quarter, according to data from Counterpoint Research, reflecting higher prices caused by the component crunch."}],[{"start":268.14,"text":"This has had a more severe impact on affordable smartphone makers. Apple, which delayed iPhone price increases, managed to grow its market share from 18 per cent to 22 per cent in the third quarter despite the broader market shrinking, the research found."}],[{"start":283.96,"text":"The iPhone 18 Pro and Pro Max, unveiled in September, were priced about $100 higher than last year. Instead of launching the new line-up together, Apple has also delayed the cheaper base model until next year, complicating comparisons to previous years and analysts’ ability to predict holiday sales."}],[{"start":303.04,"text":"Otto said escalating memory prices remained a risk to Apple’s forecasts. “Everyone’s assuming [the memory market] has already hit the top. But has it?” she said."}],[{"start":317.04,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793673545_2703.mp3"}