Apple's iPhone Prices Set to Soar as Memory Costs Continue to Rise

Apple's iPhone prices have already increased by up to $300 in response to rising memory costs, which are expected to continue escalating. According to a TrendForce report, memory accounts for over 34% of the bill of materials for the latest iPhones, and is projected to exceed 40% in the first half of 2027. This means that Apple may need to raise prices even further or reduce its gross margins to maintain profitability.

The trendforce report estimates that contract memory prices have risen five to sevenfold since the start of 2025. The impact on Apple's business is significant, with CEO Tim Cook warning in March about 'significantly higher memory costs' affecting the company's results. Apple's iPhone sales generated $54.25 billion in revenue in the June quarter alone.

While memory suppliers such as Micron Technology and SK Hynix are benefiting from the price increases, chip vendors like Qualcomm are facing a challenging environment due to lower handset revenues and higher input costs. Qualcomm has taken pricing actions to reflect these changes, but its shares have still declined 4.21% year-to-date.

However, Apple's ability to absorb the hit by trimming gross margins could give it an advantage over competitors who may struggle to keep up with rising costs. As TrendForce notes, weaker competitors may be forced into steeper price hikes or discontinue lines running at negative gross margins, allowing Apple to gain market share.