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Apple’s inventory surges 154% as memory chip costs climb
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Apple’s inventory climbed to $14.54 billion in its fiscal fourth quarter, up 31.1% from $11.09 billion in the prior quarter and 154.3% from $5.72 billion a year earlier, the company reported Monday. The sharp build, concentrated in computer memory, reflects supply-chain hedging as component costs rise. Apple forecast a 45% to 46% gross margin for the December quarter, down from 47.9% in the September quarter.
CEO John Ternus told analysts memory pricing is “unprecedented.” He said higher September-quarter memory costs were partly offset by carrying inventory and lower costs on some non-memory components. Apple expects “even higher memory costs” in the December quarter.
Apple is trying to blunt the pressure through earlier device price increases, including Mac and iPad at the end of June and iPhones in September. Ternus said those moves would only partially offset memory costs. He warned that memory costs are expected to keep rising beyond December, while the benefit from carry-in inventory should decline over time.
To improve supply, Apple has increased purchases of the key component. Ternus said manufacturing purchase obligations rose by $33 billion from June to the September quarter, a figure due in the annual filing. COO Sabih Khan, who oversees supply chain and manufacturing, joined the call and reiterated the higher obligations but did not rule out future device price increases.
The cost pressure coincides with uneven product performance. iPad revenue was $6.2 billion, below analysts’ $6.7 billion expectation and down 10% from a year earlier, which Apple blamed on supply constraints. iPhone and Mac sales beat estimates.
The results highlight a balancing act for Apple: securing enough memory amid tight supply while protecting margins and pricing. With memory costs projected to rise further, investors will watch inventory builds and purchase commitments. They will also watch whether more device price increases follow.
