Apple CEO warns RAM prices hit 'unprecedented' levels, threatening profit margins

Apple's newly appointed CEO John Ternus has issued a stark warning about memory chip pricing, describing the current market situation as "unprecedented" during a conference call following the company's fiscal Q3 results. Ternus cautioned that memory costs will climb even higher in the fourth quarter of 2026 compared to earlier quarters, a trajectory that threatens to erode Apple's profit margins despite stronger-than-expected financial performance.

The warning reflects an industrywide crisis dubbed "RAMageddon," driven by surging demand for memory chips from AI datacentres. This demand has created acute supply constraints, pushing prices upward across the technology sector. Apple has already attempted to offset these rising component costs through price increases: iPads and MacBooks were raised in June 2026, followed by iPhone price hikes in September. Ternus acknowledged these increases had "provided some offset," but acknowledged they are insufficient to fully mitigate the cost pressures ahead.

Despite the memory crisis, Apple reported strong financial results for its fiscal third quarter ending September 2026. Revenue rose 12% to $114.5 billion from $102.5 billion year-over-year, and earnings per share reached $2.10, beating analyst expectations of $1.99. Growth was driven primarily by iPhone sales and strong Mac mini demand, particularly driven by interest in local AI applications. However, Apple's stock fell 2.75% in after-hours trading following Ternus's disclosure of margin pressures. The company noted that its more measured approach to AI infrastructure spending, compared to competitors like Amazon and Alphabet, has helped preserve cashflow while strategic partnerships support AI capability development.

Ternus's "unprecedented" characterization marks a significant escalation from prior warnings by his predecessor Tim Cook, who had cautioned about "significantly higher memory costs" in June 2026. Industry analysts view the current situation as unsustainable, with widespread expectations that 2027 will see continued pricing pressures affecting consumer electronics pricing across the sector.