It's 'unavoidable': Apple says it will be forced to raise prices due to the AI boom

By Christine Ji

Tech giants are gobbling up memory chips for AI servers, leaving Apple with soaring component costs that Tim Cook says will eventually be passed on to consumers

Analysts estimate that the price of the iPhone 18 Pro could rise by $270 as Apple struggles with the ongoing memory shortage.

The memory-chip shortage has reached a tipping point, and Apple plans to raise prices on its products as a result.

In an exclusive interview with the Wall Street Journal published Wednesday, Apple (AAPL) CEO Tim Cook said that price increases have become "unavoidable" as booming demand for artificial-intelligence data centers leads to sustained supply-chain disruptions for memory and storage solutions. Alphabet (GOOGL) (GOOG), Amazon.com (AMZN), Meta Platforms (META) and Microsoft (MSFT) are spending roughly $700 billion on AI this year. They're placing massive orders for products from memory providers Micron (MU), Samsung (KR:005930) and SK Hynix (KR:000660), completely buying out supply with massive prepaid contracts.

"This is a hundred-year flood," Cook said. "I've never seen anything like it in any area in over 40 years."

Apple's shrewd inventory management has allowed the company to avoid passing on costs to consumers thus far. Last September, Apple's iPhone 17 lineup didn't feature any price increases, and earlier this year the company was reported to be buying up large quantities of memory chips to starve out competitors - but the latest comments suggest the ongoing shortage has become too much to bear.

Cook did not provide further details on when the price hikes will occur or the types of products that will be affected. According to research firm TechInsights, passing the higher component costs entirely onto consumers would add roughly $270 to the cost of the next iPhone Pro model - assuming Apple looks to keep its own margin levels steady.

In a Wednesday note following the announcement, Evercore ISI analyst Amit Daryanani wrote that Apple will likely raise prices on its higher-end products starting this fall with the iPhone 18 Pro. However, he believes that the base model might only see a $100 price increase, "with Apple likely pushing more of the incremental cost into higher memory/storage configurations."

Apple had already begun to raise prices on its MacBook Air line earlier this year, increasing the starting price to $1,099 from $999. Apple also discontinued the entry-level $599 Mac Mini model.

The company should be able to offset some of the rising costs through its large-scale supply agreements, "though its leverage has likely declined at the margin given hyperscaler demand," Daryanani wrote.

The Wednesday announcement provided some clarity to investors wondering how Apple would weather the memory shortage. Analysts have been speculating for months about the impact that rising memory costs would have on Apple's product prices and margins. In January, Cook warned that memory costs would increasingly impact Apple in the second half of 2026.

Beyond increasing prices, Apple is also looking to use its cash stockpile to address the situation, although Cook ruled out the possibility of Apple manufacturing its own memory and storage chips. "We're willing to use our balance sheet to help be a part of the solution," Cook told the Wall Street Journal. "Obviously, more capacity is needed."

-Christine Ji

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06-17-26 1919ET