Apple Confronts '100-Year Flood' as Memory Chip Prices Soar

Apple's (NASDAQ: AAPL) financial situation has taken a turn for the worse due to a surge in memory chip costs. In his final earnings call, CEO Tim Cook described the current pricing as a '100-year flood'-level event.

The prices of some memory chips have skyrocketed by up to 90% in the first quarter of 2026 alone, driven by a technology industry rush to secure chips for devices and data centers. This supply-and-demand imbalance could take years to resolve, putting pressure on Apple's historically strong margins.

Apple's gross margin for its fiscal third quarter was 50.1%, which included a two-percentage-point benefit from a tariff refund. Without this benefit, the gross margin would have declined quarter over quarter, highlighting the underlying pressure on profitability.

CFO Kevan Parekh stated that more than 100% of the decline in margins can be explained by the memory cost change, making clear that rising chip costs are the dominant force weighing on the company's financials.