According to an analysis by JPMorgan, referenced by the Financial Times, the expenditure on memory within the bill of materials for Apple’s smartphones is projected to escalate considerably as soon as 2027. While this component currently accounts for roughly 10% of an iPhone’s total component cost, that figure could potentially reach 45% in the years ahead.
Apple annually procures memory for approximately 250 million units and historically maintained a dominant position as a major purchaser in this market. Nevertheless, circumstances have shifted; the company now faces stiff competition from other significant entities vying for limited memory supplies provided by manufacturers such as Samsung, SK Hynix, and Micron.
The primary catalyst driving this price acceleration is identified as the rapid expansion of artificial intelligence infrastructure. Firms establishing data centers for AI applications, including NVIDIA and major cloud service providers, are aggressively acquiring memory in massive quantities, frequently offering superior terms and advance payments amounting to billions of dollars. This activity is reshaping the conventional market dynamic: instead of routine long-term contracts stipulating fixed volumes, producers are increasingly accepting upfront payments and allocating production capacity toward the clients offering the most lucrative deals.
This mounting pressure is already impacting Apple’s smartphone launch planning. Sources indicate that the introduction of the iPhone 18 might be phased: premium models are scheduled for release in the autumn of 2027, with more budget-friendly variants arriving later in the spring. Furthermore, a simultaneous unveiling of a foldable iPhone is under consideration.
Internal organizational transitions are also underway: John Ternus, head of hardware development, is reportedly positioned to succeed Tim Cook as CEO, possibly transitioning Cook into the role of Executive Chairman. A primary decision for the incoming leadership will involve determining whether to absorb the escalating expenses or pass them on to consumers.
Market observers believe the ultimate choice will hinge on the strategy designed to maintain market share, particularly in highly contested geographies like China and India. In one potential scenario, Apple might opt to refrain from steep price hikes to safeguard its standing, even if this necessitates a reduction in profit margins.
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