The global shortage of memory chips is impacting the smartphone market, sparking a central debate from Silicon Valley to Shenzhen: will Apple choose to increase prices or sacrifice profit margins to attract new users?
The iPhone manufacturer forecasted last week that strong sales growth would be driven by demand for the iPhone 17 series. CEO Tim Cook informed investors that he anticipates a significant surge in memory chip prices but did not respond to analyst inquiries about whether Apple would consequently raise its product prices.
Cook stated during the earnings call, "We have a range of levers we can pull. It's too early to gauge the outcome, but we certainly have a variety of options to consider."
Cook declined to comment on whether Apple could maintain current prices to gain market share for the iPhone and Mac, capitalizing on greater supply chain pressures faced by competitors.
Analysts believe that, even amid the chip shortage, Apple's industry clout allows it to secure sufficient chip supply from long-term suppliers like Samsung Electronics, SK Hynix, and Micron to meet iPhone production needs—an advantage smaller smartphone makers cannot match.
Tech companies such as Meta, Google, and Microsoft are accelerating their AI infrastructure build-out, consuming vast amounts of memory chip production capacity. Chip manufacturers are also prioritizing the allocation of production capacity to higher-margin components for data centers over consumer electronics, further driving up chip prices. Memory chips, specifically DRAM (Dynamic Random-Access Memory), are core components in smartphones, essential for the smooth operation of high-power applications.
Apple's decision is poised to influence the entire industry's direction. Apple's pricing strategy could have profound ripple effects across the sector.
According to some estimates, Apple's smartphone shipment volume grew by nearly 10% year-over-year last year, leading the global market.
Analysts predict that if Apple holds prices steady while smaller competitors are forced to raise theirs, the iPhone's market appeal will be significantly enhanced. Conversely, if Apple leads with a price increase, it would create room for competitors to follow suit.
Nabila Popal, Senior Research Director at IDC, said, "This is the most critical question for the entire industry right now. It's a double-edged sword—while not raising prices could help Apple gain market share, it might also dissatisfy investors."
IDC data suggests that the memory chip shortages affecting competitors could lead to the first year-over-year decline in global smartphone shipment volume in 2026 since 2023.
Qualcomm, the world's largest smartphone chip designer and a key supplier for high-end Android phones, issued a performance outlook on Wednesday that fell short of Wall Street expectations, citing memory chip shortages faced by its downstream handset customers. This has heightened market concerns about the industry's prospects.
Akash Palkhiwala, Qualcomm's CFO, stated that despite strong end-market demand, the company's core customers in China cannot produce phones at full capacity due to the memory chip shortage.
He said, "We are seeing multiple device makers, particularly in China, take action to reduce handset production plans and clear channel inventory."
During Qualcomm's earnings call, analysts again steered the conversation toward Apple. Ben Reitzes of Melius Research noted, "It appears Apple will continue to receive a disproportionately large share of the available DRAM supply in the market."
A veteran smartphone industry executive, who spoke on condition of anonymity to discuss sensitive supply chain issues, revealed that Android phone manufacturers are closely watching to see if Apple will raise prices.
The executive stated, "If Apple absorbs all the increased memory chip costs and keeps phone prices unchanged, the price advantage of Android phones would disappear, casting doubt on whether their projected shipment volumes can be achieved."
Some Apple investors believe a price hike is inevitable.
Dan Morgan, a portfolio manager at Synovus Trust, said, "Apple has traditionally had more priority in the supply chain than its competitors... but it is not entirely immune to market shortages. It is highly likely Apple will continue to increase prices when launching new iPhone models."
Samsung's actions will also impact the industry landscape. Analysts believe the Korean company's mobile division may similarly have the capacity to absorb higher memory chip costs, as its chips can be supplied by another division within Samsung.
"eMarketer analyst Gajo Sevilla said, "We are closely monitoring the moves of Apple and Samsung. If these two companies raise prices, they effectively raise the industry's price ceiling, and other manufacturers will most likely be forced to adjust their pricing accordingly."
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