As Tim Cook dinner steps down, Apple hit file gross sales — however a chip scarcity looms

Apple reported a file quarter on Thursday. But outgoing CEO Tim Cook warned of some gathering storm clouds within the type of reminiscence chip provide points that might influence enterprise within the close to future.

“At this time Apple is proud to report our greatest March quarter ever, with income of $111.2 billion and double-digit development throughout each geographic section,” Cook dinner stated throughout Thursday’s earnings name. “iPhone achieved a March quarter income file, fueled by such extraordinary demand for the iPhone 17 lineup.”

Much less rosily, Cook dinner relayed that Apple spent extra on reminiscence chips in March than in earlier quarters, although the corporate’s prices had been offset by its potential to promote stockpiled inventory. However, he warned, the expectation is “considerably increased reminiscence prices” in June and past — the likes of which can “drive an growing influence” on the enterprise.

Cook dinner was referencing what has generally been known as “RAMageddon,” the development of the AI trade gulping up reminiscence chips with such astonishing gusto it’s spurring shortages. That is driving up the costs of {hardware}. Apple is primarily a {hardware} firm, in order that’s clearly not nice information for its core merchandise.

Most notably, the chip scarcity has impacted the iPhone. Regardless of the sturdy gross sales figures touted by Apple on Thursday, it has previously been reported that RAM prices have quadrupled — impacting telephone manufacturing prices and placing John Ternus, Apple’s incoming CEO, in a less-than-enviable place.

One potential outcome could also be that Apple increases prices for the iPhone. “There’s just a bit much less flexibility within the provide chain in the meanwhile for getting extra elements,” Cook told Reuters on Thursday.

Ternus, who has served as Apple’s senior vice chairman of {hardware} engineering, was on Thursday’s earnings name and praised Cook dinner. “For my part, Tim is without doubt one of the biggest enterprise leaders of all time. Moving into the position of CEO is an unbelievable honor, and it means an incredible deal to me to have Tim’s belief and confidence,” Ternus stated.

He’ll clearly have his work minimize out for him when he begins the job on September 1. However he’ll nonetheless have Cook dinner’s provide chain expertise to lean on for some time. Cook dinner will develop into government chairman.