Apple's Memory Price Squeeze Threatens Margins

Apple's sales are booming, but its profit margins are under pressure due to rising memory prices. In the June quarter, iPhone and Mac revenue set new records, with a 22% and 29% increase respectively from the same period last year.

The reported gross margin was 50.1%, but excluding tariff refunds, it fell by 120 basis points from 49.3% in the March quarter. Management has guided for an even lower margin of 47-48% in the September quarter, citing memory prices as the main culprit.

Apple's management attributes the increased memory costs to a 'once-in-a-century flood' and expects these prices to continue rising beyond the September quarter. The company has already raised prices on Mac and iPad, but it's uncertain how customers will respond to this move.