As Tim Cook departs, Apple hits record sales — but chip shortage looms

Apple was mentioned a quarterly record on Thursday. However, outgoing CEO Tim Cook warned of some storm clouds in the form of memory chip supply issues that could affect the business in the near future.

“Today Apple is proud to report its best-ever March quarter, with revenue of $111.2 billion and double-digit growth in every geographic segment,” Cook said during Thursday’s earnings call. “iPhone achieved record March quarter revenue, fueled by exceptional demand for the iPhone 17 series.”

Cook said Apple spent more on memory chips in March than in previous quarters, although the company’s costs were offset by its ability to sell stored inventory. But, he warned, the expectation is “significantly higher memory costs” in June and beyond — something similar may “have an increasing impact” on the business.

Cook was referring to what is commonly called “RAMaggedon,” the AI ​​industry’s tendency to consume memory chips with such surprising gusto that it causes shortages. This drives up hardware prices. Apple is primarily a hardware company, so obviously this isn’t great news for its core products.

More specifically, the lack of chips has affected the iPhone. Despite the strong sales figures Apple reported on Thursday, it has previously mentioned that RAM costs have quadrupled — affecting phone production costs and putting John Ternus, Apple’s incoming CEO, in a less enviable position.

One possible outcome might be that Apple raises prices for the iPhone. “There’s a little less flexibility in the supply chain right now to get more parts.” Cook told Reuters on Thursday.

Ternus, who has served as Apple’s senior vice president of hardware engineering, was on Thursday’s earnings call and praised Cook. “In my view, Tim is one of the greatest business leaders of all time. Taking on the role of CEO is an incredible honor and it means a lot to me to have Tim’s trust and confidence,” said Ternus.

He will apparently have his work cut out for him when he starts work on September 1st. But he’ll still have Cook’s supply chain experience to lean on for a while. Cook will become executive chairman.