With Tim Cook stepping down, Apple has achieved record sales, but a chip shortage is looming

Apple reported a record quarter on Thursday. However, outgoing CEO Tim Cook warned that some storm clouds are gathering in the form of memory chip supply issues that could impact the business in the near future.

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

Less optimistically, Cook relayed that Apple spent more on memory chips in March than in previous quarters, although the company’s costs were offset by its ability to sell stock inventory. But he warned that the outlook is for memory costs to “rise significantly” in June and beyond – the likes of which could “result in a growing impact” on the business.

Cook was referring to what is often called “RAMageddon,” the trend in the AI ​​industry that is consuming memory chips with astonishing enthusiasm leading to shortages. This leads to higher prices for devices. Apple is primarily a hardware company, so this is clearly not great news for its core products.

Notably, the chip shortage affected the iPhone. Despite the strong sales numbers Apple touted on Thursday, it was previously reported that RAM costs have quadrupled — impacting phone production costs and putting Apple’s incoming CEO John Ternos in an unenviable position.

One possible outcome could be Apple increasing iPhone prices. “There’s a little less flexibility in the supply chain right now to get more parts,” Cook told Reuters on Thursday.

Ternus, who served as Apple’s senior vice president of hardware engineering, was on Thursday’s earnings call and praised Cook. “In my view, Tim is one of the greatest business leaders of all time,” Ternos said. “Being CEO is an incredible honor, and it means a lot to me to have Tim’s confidence.”

It’s clear he’s going to have a hard time working when he starts work on September 1st. But he will still have Cook’s supply chain experience to fall back on for a while. Cook will become CEO.