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Memory prices bite into Apple's margins

Beau Brummell · November 4, 2026
Record revenue, but Apple expects gross margin to fall to 45-46 per cent as memory chip prices soar.

John Ternus's first quarter as Apple chief executive went well until the company gave its margin forecast.

Apple reported record September-quarter revenue of $114.5bn on Monday, up 12 per cent, and said holiday-quarter sales should grow 7 to 10 per cent, ahead of forecasts. But finance chief Kevan Parekh said gross margin would fall to between 45 and 46 per cent, below the 46.3 per cent analysts expected, CNBC reported. The shares fell after hours.

The memory squeeze

"What we're seeing with memory pricing right now is unprecedented," Ternus told analysts, according to the call transcript. "Looking beyond the December quarter, we see the pricing for memory purchases continuing to increase."

The squeeze comes as AI data centres soak up memory chips. Apple expects iPhones and Macs to be in short supply over the holidays, mainly because of memory.

It would be Apple's third straight quarterly margin decline, from 50.1 per cent in the June quarter and 47.9 per cent in September. The September figure was flattered by about one percentage point of tariff refunds. At the midpoint, the new forecast would be Apple's lowest gross margin since late 2023.

Apple has already raised prices. Macs and iPads went up at the end of June and iPhones by $100 in September. To secure supply, it has also increased its manufacturing purchase obligations by $33bn in a single quarter.

Ternus took over from Tim Cook on September 1. Cook had called the memory shortage a "hundred-year flood".

*Image: Apple Park in Cupertino, California, from the air. Photo: Nils Huenerfuerst / Wikimedia Commons, CC0*

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