Apple Bets Big on Foldable iPhone as Memory Costs Spiral Out of Control

Apple's upcoming product event is set to take place tomorrow, and the company is expected to introduce its first major iPhone design change in nearly a decade. The new device, reportedly called the iPhone Ultra, is a foldable phone that will start at $2,400 and top out at $3,000 for higher storage tiers.

According to CNBC's MacKenzie Sigalos, Apple's Chief Executive Officer Tim Cook has described the current memory pricing environment as a '100-year flood.' This has led Apple to reluctantly raise prices, with some models expected to see price increases of up to $500 compared to their predecessors.

The iPhone Ultra is seen as a way for Apple to protect its margins despite modest unit growth. The company's gross margin is already at 50.1%, and Apple is banking on the premium pricing of the new device to offset any potential losses.

However, this strategy also comes with risks. Apple faces tough comparisons to last year's iPhone lineup, which drove 22% year-over-year growth. Additionally, the company's services segment is cooling, with a 12% year-over-year increase in revenue pressured by foreign exchange and App Store rule changes.