As Tim Cook Steps Down, Apple Hits Record Sales Despite Looming Chip Shortage

Apple announced record-breaking quarterly results on Thursday. However, outgoing CEO Tim Cook cautioned about emerging challenges related to memory chip supply that could soon affect operations.

“Today Apple is proud to report our best March quarter ever, with revenue of $111.2 billion and double-digit growth across every geographic segment,” Cook said during Thursday’s earnings call. “The demand for the iPhone 17 lineup resulted in a March quarter revenue record for iPhone.”

Cook also noted that Apple spent more on memory chips in March compared to prior quarters, mitigated by selling existing inventory. Nevertheless, he warned of “significantly higher memory costs” in the future, potentially impacting operations further.

Cook referred to the ongoing “RAMageddon,” a situation where the demand for memory chips by the AI industry is causing shortages and driving hardware prices up. This is a concern for Apple, given its focus on hardware products.

The chip shortage has notably affected the iPhone. Despite Apple’s strong sales reported on Thursday, RAM costs have quadrupled, impacting production costs and presenting a challenge for John Ternus, Apple’s new CEO.

This may result in Apple raising iPhone prices. “There’s just a little less flexibility in the supply chain at the moment for getting more parts,” Cook told Reuters on Thursday.

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

Ternus will face challenges when he steps into his role on September 1 but will still benefit from Cook’s supply chain expertise, as Cook transitions to executive chairman.