Tim Cook Confirms Apple Will Raise Prices Due to Memory and Storage Costs
In “iPhone and Services Drive Apple to Record Q2 2026 Despite Supply Constraints” (1 May 2026), Michael Cohen and I wrote:
the more revealing guidance came from Cook, who warned that memory costs would be “significantly higher” next quarter due to memory manufacturers redirecting output to AI chips. It’s going to get worse before it gets better, as Cook noted, saying, “beyond the June quarter, we believe memory costs will drive an increasing impact on our business.” Apple can absorb some of that impact thanks to its scale and margins, but only up to a point.
That point has now arrived. In an exclusive interview with the Wall Street Journal’s Rolfe Winkler, outgoing Apple CEO Tim Cook acknowledged that the company would have to raise prices to account for the soaring costs of memory and storage chips, driven by demand from AI companies. The article is behind a paywall, but you can watch the summary video for free.
Winkler suggests in his summary that Apple has absorbed the cost increases so far because it has always treated memory and storage upgrades as profit centers. That’s no surprise to the Apple community, which has long chafed at Apple’s premium prices for memory and storage. But now, for instance, the price of standalone internal flash storage is closer to and sometimes even higher than Apple’s upgrade prices.
Calculating Possible Price Increases or Margin Hits
Winkler quotes research firm TechInsights as saying that the cost of memory and storage in an iPhone 17 Pro was about $50 last year, but the same components for the upcoming iPhone 18 Pro would be about $200. Apple’s gross margin on hardware was 38.7% in Q2 2026, down from 40.7% in Q1 2026. We don’t know the iPhone 17 Pro’s specific margin—as a premium product, it’s probably higher than average—but let’s use 38.7% for illustration. For a 256 GB iPhone 17 Pro that retails for $1100 and has a 38.7% margin:
- Profit would be $1100 × 0.387 = $425.
- Cost of goods would be $1100 – ($1100 × 0.387) = $675.
- The estimated memory/storage portion of the cost of goods is $50.
So, for a hypothetical iPhone 18 Pro:
-
The increase in the estimated memory/storage cost is $200 – $50 = $150.
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The estimated cost of goods would be $675 + $150 = $825.
-
To maintain the $1100 price, the profit would fall to $1100 – $825 = $275.
- At a price of $1100, the resulting margin would be $275 ÷ $1100, or 25%.
- To maintain a 38.7% margin, the price would be $825 ÷ (1 – 0.387) = $1345.
- In raw dollars, the price increase would be $1345 – $1100 = $245.
- As a percent increase, it would be ($1345 – $1100) ÷ $1100 × 100 = 22.3%.
Again, these numbers are almost certainly off because the iPhone 17 Pro likely has a higher gross margin, and we don’t know how other component prices might change over the year, especially with Apple’s volume purchasing abilities. The point, however, is that a $150 increase in the cost of goods would only result in a $150 price increase if Apple were willing to accept a gross margin of ($1250 – $825) ÷ $1250 × 100 = 34%.
Obviously, Apple could absorb such costs and more if it were to accept dramatically lower gross margins. But as high-minded and customer-focused as Apple is, the company is still in business to maximize profit.
Should You Buy Now?
Practically speaking, if you’re pondering the purchase of a new Mac, iPhone, iPad, or Apple Watch, you might consider making it sooner rather than later. Historically, I would have recommended that anyone in the market for a new iPhone wait until the new models appear in September, for instance, but it might make sense to buy one of today’s models instead if it’s $250 less. We don’t know when Apple will raise prices, but it would be easiest to do so with the release of new products.
Of course, Cook didn’t let the possibility of increased prices slip accidentally. If the threat of higher prices increases demand for Apple products now, that could still boost Apple’s bottom line. That’s what happened in 2025 when threatened tariffs caused people to move up planned purchases to an extent that outweighed the cost of the actual tariffs (see “Apple Reports Record-Breaking Q3 2025 Results,” 1 August 2025).
In other words, don’t look for Apple to be starting a GoFundMe anytime soon.
The only thing on my immediate wish list is perhaps a replacement for my iPhone 15. I was planning on getting a refurb 17 once they arrive. The 17 is a very solid upgrade and the refurb, at ~ $700, would make it quite good value too.
I have little desire to wait until spring for a meh “updated” 18, especially because consensus is that it will offer little of substance other than perhaps 12 GB RAM which I don’t care about because I have zero interest in tuning AI Siri’s voice (and I forget the other 12-GB AI limitation so it can’t be that important).
So I guess my only concern would be that refurb 17s could get more expensive once Apple jacks up new iPhone 18 Pro prices in Sep. I don’t think that’s very likely though. For now I’m left wondering when the 17 will finally show up in the refurb section.
Fortunately for me, my loving, wise, and prescient wife surprised me with a new iPad Pro 13 M5 on my recent birthday… Nothing else on my lust list…
The prospect of a price increase does have me halfheartedly considering upgrade offers from some of the mobile carriers. For example, one of the major US cellular carriers is offering an iPhone 17 Pro for “free” with a 2 year contract without requiring a trade-in if you switch your line from another carrier.
I remain completely satisfied with my iPhone 13 mini, but the battery is starting to fade noticeably now that its health recently dipped below 80%. I really am not keen to get a larger phone, but maybe it is time for me to give up.
There’s some speculation the hike won’t just be for the 18 Pro at its Sep launch, but that Apple could raise existing 17 prices within days.
The situation has introduced a new factor for those pondering a purchase: delivery time.
I just placed an order for an M4 Mac Studio with Apple. Promised delivery time is mid-October. Howsomever, sellers on eBay are offering them with 5-day delivery — for a $1,000 premium.
Sigh. Well, I am planning to upgrade o a 17 Pro from an SE 2nd Gen. I was going to wait until (hopefully) there were some (minor) discounts available in Sept. when the 18 comes out. I really don’t like to buy on rumors. But it seems like if I wait, I may be paying more for a 17 Pro than I would be if I bought now–was really hoping to get an Apple refurb 17 Pro, but then so probably are about 3 million other users.
First World problem, I know, but still a bit annoying.
It’ll be interesting how Apple deals with these increases in their September phone announcements.
Are they going to come out right near the beginning on announcement day and say something like…
“First, as we all know, the memory industry has seen major increases in demand due to advances in AI that require more memory. As such, the prices of memory have seen 3 to 5 times price increases over the recent months. Here at Apple we have been absorbing these increases for as long as we possible could, to benefit our customers with stable prices. However, despite buying as much memory in advance as we could, even we have been overwhelmed by these increases. So please be aware that some prices will increase beyond expectations this year.”
Or will they just say the usual…
“The new iPhone 18 Pro and Pro Max will start at $1349 for the Pro and a hundred dollars more for at $1449 for the Pro Max.”
And kinda act like the prices are what they are without mentioning the problem by name, lol!
I normally buy the biggest phone+storage, but really, will I buy an iPhone Ultra/Fold with 2TB at GB£2800…mmm, colour me sceptical. (Especially if it only comes with Touch ID over Face ID!)
I very much expect the prices to be mentioned in a slide at the end and nothing more.
Yes, probably. Given Tim’s taken the lead now to cover the issue for the new CEO in advance. For Apple at least, the less said further on the topic, the better.
Hubby has an iphone 13 mini and he really likes it. Unfortunately, the battery isn’t lasting as long as he needs. I may have talked him into a 17. I have the 17 and the battery life is nothing short of amazing, compared to my 12 mini and the 1G SE. Also, at this time, his 13 mini has a $150 trade in and I get the 17 for $730. So with the 3% Apple card discount and trade in, the upgrade is $600 - which I consider absolute cray cray.
Apple will replace his 13 mini battery for $89.
From what I understand, not until it is something like below 80%. It is 84% right now and will likely sit there for another year. I also suspect Apple might drop the 13 for iOS upgrades next year. His phone will be 4 years old in October.
That is true for the Apple Watch, but not for iPhones. If you insist on paying, Apple will do the replacement for the listed fee.
I will say it has been two years since I have done an Apple Genius Bar battery service, but that was with a 13 Pro with 87% max capacity, and I have done three other battery replacement service with similar capacities.
Yes. The 80% threshold for a phone or a laptop is for AppleCare/Warranty service. But if it’s not covered or you agree to pay anyway, they will replace a battery before it hits that threshold.
And prices have just gone up.
Wow. The Apple TV price increase is shocking.
I have a few 2nd Gen 4K Apple TVs that I’m looking to sell, and I was thinking that their eBay value was going to plummet as soon as Apple announced new models. I guess I have a reprieve!
Edited to add: I forgot to mention that what makes the Apple TV price increase shocking, aside from its percentage, is that the comparison between an Apple TV and Fire Sticks or Rokus is pretty challenging. Apple properly can argue that its privacy policies are worth a large premium, but I doubt that most consumers will care when comparing a $40 device versus a $200 device.
Third-party sellers (Amazon, BestBuy, etc.) may not immediately raise their prices. So if you’ve been considering buying a current version of one of the affected models, jump now!
Just a few days ago I was looking at the current iPad Mini to replace my iPad Mini 5. Guess I will replace the battery (currently ~80%) in the Mini 5.
I don’t have any ill feelings towards Apple. They held the line on prices longer than most electronics companies. Put the blame where it belongs – on ai.
I was planning getting a new iPad when i read this last night.
Today I went to check the Apple store (UK) to find that the M4 Air has gone up by £150 overnight.
could be wrong there, it might only be £50.
It’s still too much though!
Yep. I too, was to replace my iPad Air and wanted to do it in a few months but..
The below list is from Reuters and in US$ dollars…
MacBook Neo (256 GB) $599 → $699
MacBook Air (512GB) $1,099 → $1,299
MacBook Pro (1TB) $1,699 → $1,999
iPad Air 128GB (11") $599 → $749
iPad Pro 256GB (11") $999- > $1,199
HomePod $299 → $349
HomePod Mini $99 → $129
Apple TV set-top box $129 → $199
I immediately snagged an Apple TV at the old price from a retailer.
One of the reasons Rokus are so cheap is that the platform increasingly monitors and monetizes your habits and inserts ads. I have one that has been working fine for a decade now, but the creeping feeling that I’m the product had me planning to get an Apple TV box at the next refresh. Today’s price increase pushed me to immediate action.
Same here. I was going to replace my Gen 1 4K model with a Gen 4 when they came out but I asked myself this afternoon: what are the odds that the Gen 4 will have a new feature that I think is worth an extra $100 (for the ethernet model)? I think I’ll be able to muddle along with a Gen 3 just fine; I’ll put that money towards a new Watch this fall instead.
The MacBook Neo sold incredibly well because of its great value proposition and was initially seen as this genius move. Apple was hailed for its astuteness in going for best value while Wintel manufacturers were forced to jack up prices on their low-end models due to component cost increase. Yet just few weeks later here we are with Apple doing exactly what the rest had been doing and massively raising the price of ironically the one Mac that contains the least amount of RAM and flash. I’m a bit baffled that Apple’s vain execs with their overinflated compensation and flashy hairdos couldn’t see what was about to come just weeks to months out. Perhaps they should spend a bit less time at the salon and a bit more with their numbers guys. (speaking of number guys, that reminds me of this hilarious scene from The Big Short, enjoy)
But, frankly, people can complain about this all day long on forums. Apple will choose to protect their XXL-sized margins as long as they can. Just look at their share price history. So if folks want Apple to eat into their margins rather than jack up prices on what should be affordable everyday gadgets, the only way to get them to do that is to just stop purchasing. Or at least delay as far as possible. If their sales actually tank (don’t worry, yesterday’s stock plunge won’t last), they will be forced to move. But if they don’t, well, they’ll just pocket the extra earnings and laugh all the way to the bank. Along with people like myself who get to enter lavish retirement early because AAPL keeps gifting us for doing essentially nothing.
There is a bit of irony to all this. These massive price hikes are being sold to the public as the consequence of DRAM and NAND cost increase that is driven by massive AI infrastructure investments. But the very products being jacked up and out of affordability range are those that manufacturers at the very same time are marketing to consumers for AI use. The snake is devouring its tail. Moving ahead, I wish us all less A and more I.
Apple has an allergy to raising prices with its annual releases. I think that when a technology is introduced, Apple sets an initially high price, but as the years pass, internal improvements and inflation raise the general price level, making the Apple device a reasonable value. At some point, Apple has to reset the price to get the margins it wants.
As a major consumer of RAM, Apple had also been able to force favorable deals with suppliers. However, with competition from new AI players, Apple has lost that position and become a price taker rather than a price maker. So it became time for a major reset.
What initially seems weird in the resets is that the major increase is for the oldest devices being sold, the Apple TV. John Gruber has theorized that the replacement is going on sale very soon, and Apple didn’t want the higher price to be the major topic of conversation when it is released.
Four-ish months ago me is very proud of himself for anticipating this and jumping on the new M5 MacBook Air (to replace the M2 I bought four years ago) rather than wait a year, like I originally planned. Also proud of buying the M4 Mac mini (with a two day delivery) rather than wait a few more months.
I did a quick search around and found several retailers with the M4 iPad Air i was planning to buy at the £699 price and got one yesterday.
On Thursday, our local Costco was offering it at £647 but on Friday the listing vanished.
Or another way to look at it is when the cost of technology drops, Apple hangs on to the higher price.
I think it is a third way: Apple says, a computer costs $2,495. What you get for that much money changes over the years.
In a similar way, for many years, I said that the Mac I wanted was around $3,000, regardless of the year. As tech prices decreased, I eventually adjusted that to $2-2.5k. It’s still there, mostly because of modern Apple’s RAM and SSD premiums.