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

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

“Right this moment Apple is proud to report our greatest March quarter ever, with income of $111.2 billion and double-digit development throughout each geographic section,” Prepare dinner mentioned 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, Prepare dinner relayed that Apple spent extra on reminiscence chips in March than in earlier quarters, although the corporate’s prices have been offset by its means 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.

Prepare dinner was referencing what has generally been known as “RAMageddon,” the development of the AI business gobbling down 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 cellphone manufacturing prices and placing John Ternus, Apple’s incoming CEO, in a less-than-enviable place.

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

Ternus, who has served as Apple’s senior vp of {hardware} engineering, was on Thursday’s earnings name and praised Prepare dinner. “In my opinion, Tim is among the best enterprise leaders of all time. Moving into the position of CEO is an unimaginable honor, and it means an amazing deal to me to have Tim’s belief and confidence,” Ternus mentioned.

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