Apple expects rising memory costs to weigh on margins
The company forecasts December-quarter gross margin of 45 to 46 percent and expects memory shortages to constrain Mac and iPad supplies.
Apple expects higher memory prices to squeeze profitability in the December quarter, with further cost increases afterward, CEO John Ternus told an earnings call. The company forecasts gross margin of 45 to 46 percent, compared with 47.9 percent for the September quarter.
Memory expenses are the main reason for the projected margin decline, alongside some costs for Siri AI. Apple also expects memory-related constraints on supplies of Macs and iPads during the December quarter.
Apple cushioned the September cost increases by drawing on memory bought earlier at lower prices and obtaining cheaper non-memory components. It expects those measures, together with June and September price increases for iPads, Macs and iPhones, to offset part of the December rise.
Asked whether Apple could raise product prices again, COO Sabih Khan did not give a direct answer. CFO Kevan Parekh said the company had been reluctant to implement the earlier increases and was weighing short- and long-term considerations.
Ternus said the benefit of advance memory purchases would diminish over time. Apple's inventory reached US$14.5 billion, more than doubling from a year earlier. He also said manufacturing purchase obligations rose by US$33 billion between June and the September quarter as Apple worked to improve supply.
