iPhone 18 Price to Hold Steady Despite RAM Shortage, Kuo Says
▼ Summary
– Apple plans to minimize iPhone 18 price increases despite a global memory shortage, potentially absorbing higher RAM costs.
– The company is negotiating memory prices with suppliers quarterly instead of every six months to manage the volatile market.
– Apple intends to offset rising component costs through its profitable services business, like Apple Music and iCloud.
– Beyond memory, other components like glass cloth for circuit boards are also in short supply due to high AI industry demand.
– The shortage of materials like glass cloth is a bottleneck affecting multiple tech companies, including Apple, Nvidia, and AMD.
Apple is reportedly preparing to absorb rising component costs to keep the starting price of the iPhone 18 stable for consumers, according to a new supply chain analysis. The tech giant aims to avoid passing on price increases “as much as possible” despite a challenging global memory shortage. This strategic move highlights Apple’s focus on maintaining its competitive pricing in a tight market.
Supply chain expert Ming-Chi Kuo indicates that Apple plans to shoulder the financial burden of escalating RAM prices internally. The company is actively working to keep the entry-level cost of the upcoming iPhone 18 consistent with previous models. To manage these volatile costs, Apple has shifted its procurement strategy, now negotiating memory prices with suppliers on a quarterly basis instead of every six months. This more frequent renegotiation is a direct response to market instability, though Kuo anticipates the company will face another round of price hikes in the next discussion cycle.
To offset these increased hardware expenses, Apple is expected to rely more heavily on its lucrative services division. Revenue from subscriptions like Apple Music, iCloud storage, and Apple TV+ will help balance the books. This approach allows Apple to protect its hardware profit margins while continuing to grow its ecosystem of recurring software and service revenue, creating a more sustainable financial model.
The component challenges extend beyond just memory. Kuo notes that a broader shortage of materials is affecting the entire industry. Suppliers are currently prioritizing components for the booming artificial intelligence sector, creating bottlenecks for other tech companies. A key material called glass cloth, essential for manufacturing printed circuit boards used by Apple, Nvidia, AMD, and Qualcomm, is in particularly short supply. As AI firms secure large volumes of these shared resources, availability for smartphone production is being squeezed, presenting an additional layer of complexity for Apple’s supply chain planning.
(Source: The Verge)
