Apple (AAPL) CEO Tim Cook says that price increases for the company’s iPhone and other devices are “unavoidable” as costs associated with artificial intelligence (A.I.) soar.
Cook said in an interview with The Wall Street Journal that Apple will raise prices on some of its electronics as soaring memory-chip costs driven by the A.I. boom become difficult to absorb.
The outgoing CEO said higher costs make price increases “unavoidable” for Apple, signalling that consumers could soon pay more for iPads, MacBooks, and Apple Watches.
Cook’s comments come as demand for memory chips has surged alongside the growth of A.I. infrastructure and data centres.
Memory chips are essential for consumer electronics such as smartphones and tablets, which Apple specializes in.
According to a recent Morgan Stanley (MS) report, costs for memory chips have risen more than sixfold over the past year as manufacturers struggle to keep pace with surging demand.
“We're doing our best to mitigate the huge increases that are being passed to us, and we've been trying to shield our customers from the increases, but the situation has become unsustainable,” Cook said in the media interview.
Cook is due to be succeeded as CEO by Apple executive John Ternus in September of this year. Cook has served as Apple’s CEO for the past 15 years, following the death of Steve Jobs.
Neither Apple nor Cook has said which of the company’s products are likely to see price increases. Apple typically unveils its new product line-up in September each year.
Research firm TechInsights estimates that memory and storage components in the iPhone could cost Apple $196 U.S. per device, up from $52 U.S. a year ago.
AAPL stock has risen 50% in the last 12 months to trade at $295.95 U.S. a share.
Tech Insider
