Apple Faces iPhone 18 Pro Margin Drop Below 40% as DRAM Prices Jump 125%
Updated
Updated · Trefis · Jun 22
Apple Faces iPhone 18 Pro Margin Drop Below 40% as DRAM Prices Jump 125%
3 articles · Updated · Trefis · Jun 22
Summary
Under a roughly $1,199 price scenario, Apple’s iPhone 18 Pro gross margin could fall below 40% from about 47% on the iPhone 17 Pro, even if the company raises prices.
Memory is driving the squeeze: the iPhone 18 Pro’s memory and storage cost is estimated at about $196 versus $52 for the iPhone 17 Pro, lifting total build cost to roughly $726 from $582.
Gartner estimates average DRAM prices could rise 125% in 2026 and NAND flash 234% as the AI boom tightens supply for memory used across data-center infrastructure.
The pressure may spread beyond flagship phones because Apple said advanced next-generation Siri features require 12GB of memory, above the 8GB in the base iPhone 17.
That leaves Apple balancing two risks central to its recent investment story: absorb higher component costs and lose margin, or raise prices on lower-end devices and risk weaker demand.
Has the AI boom ended Apple's era of ever-expanding profits, forcing a choice between high margins and affordable products?
With Nvidia now TSMC's top client, has Apple lost the critical supply chain dominance that fueled its hardware empire?
iPhone 18 Pro’s Unprecedented Price Surge: AI Boom Triggers Memory Crisis and Industry-Wide Upheaval
Overview
Apple is under significant financial pressure as it prepares to launch the iPhone 18 Pro, driven by a dramatic surge in component costs, especially DRAM and NAND flash memory. This global shortage is forcing Apple to consider unprecedented retail price hikes, with the iPhone 18 Pro expected to start at $1,399 or higher—a $200 to $300 increase over the previous model. These rising costs not only threaten Apple's profit margins but also challenge its ability to maintain consumer loyalty, as the company must balance higher prices with the need to justify value in a competitive market.