Apple’s sales have grown by their most in years, but the company is struggling with making enough chips for its devices, the company has revealed in its latest results.
The memory chip shortage is causing enough problems that the company’s iPhone sales were dragged down, Apple said.
The results come as Apple’s incoming chief executive, John Ternus, prepares to take over from Tim Cook after 15 years at the top of the company.
Both the latest iPhone 17 Pro series and the new, cheaper MacBook Neo are selling well even amid reduced demand for other consumer electronics, the result showed. But Mr Cook warned that those products and others – as well as the company’s results more generally – could be troubled by a widespread shortage of chips.
Limited supply of the advanced processors for iPhone have already hampered Apple’s ability to capitalize on strong demand. The chips are made by Taiwan’s TSMC, the leading producer of AI processors.
Analysts say Apple’s clout with long-time suppliers could position it better than rivals in securing memory chips but it might have to raise prices later this year.
“The key question will be deciding the perfect balance strategically between increasing prices and maintaining profitability or focusing on gaining share by not increasing prices,” said Nabila Popal, a senior research director at IDC.
“I think Apple will increase prices of the Pro and ProMax in upcoming fall launch, however even if they don’t, with the super high-end iPhone fold coming up – which we expect to be well over $2200– will help balance some of the increased costs.”
The results, including a forecast of 14% to 17% sales growth for the current quarter that was above estimates, bode well for the company before hardware chief John Ternus takes over as CEO in September. Cook will stay on as executive chairman.
The change comes as Apple looks to close the gap with rivals Microsoft and Alphabet, which have moved faster to roll out AI features and infrastructure.
Investors are expected to get more details about its AI plans at it annual software developer conference in June.
Some analysts said Apple’s decision to no longer aim to bring its net cash – cash minus debt – to a net neutral position may help it manage its financial position better in the AI era.
The move gives it greater balance-sheet flexibility, allowing it to absorb higher costs, support share repurchases and deploy capital more strategically, TD Cowen analysts said.
Additional reporting by agencies
