Apple CEO Tim Cook cites supply constraints and memory-chip price surge ahead of leadership transition
Apple forecast slower iPhone growth and lower overall revenue as a shortage of advanced processors and rising memory-chip costs tighten margins, while Cook expressed optimism about future opportunities before handing the CEO role to John Ternus.
Apple said its iPhone sales are expected to grow at a mid-teens percentage rate this quarter, a slowdown from the 22% growth recorded in the prior period. Overall revenue is projected to rise 9%-10% year over year, below analysts' 12% estimate, and gross-margin pressure is anticipated as memory-chip costs climb.
Tim Cook, speaking in his final earnings call as chief executive, noted that the company faces "significant constraints" in its supply chain and described the current environment as a "hundred year flood" in memory-chip pricing. He said the limited number of DRAM suppliers – Micron, SK Hynix and Samsung – hampers flexibility and pricing, and added that Apple is "evaluating all options."
"I am beyond excited" about the opportunities ahead, Cook said, while also acknowledging a quarter of "scrambling on the supply side."
Apple raised prices on Macs and iPads in June to offset higher component costs. The firm also highlighted its strategy of running more AI tasks on devices, which it views as a competitive advantage for privacy-focused users, and suggested that increased AI usage could boost iCloud subscriptions and the Services segment.
Shares fell up to 8% in after-hours trading following the results, later settling about 6% below the prior close of $333.85. The company reported total revenue of $109.4 billion for the quarter, up 16% year over year, and net income of $29.8 billion, or $2.02 per share, slightly above expectations.
Incoming CEO John Ternus, who attended the call, reiterated Cook’s optimism, saying the company sees "so much opportunity" amid the evolving AI landscape.