Even Apple can’t seem to shrug off the mounting pressure from skyrocketing memory and storage chip costs.
On June 18, Apple CEO Tim Cook dropped some pretty significant news: we’re looking at higher product prices across the board to combat the massive spike in memory and flash storage expenses.
Cook didn’t sugarcoat it, noting, “Unfortunately, these price hikes are unavoidable. We’ve been pushing hard to shield our customers from absorbing these massive cost increases, and we’ll keep trying our best, but honestly, this situation is getting unsustainable.”
That said, Cook wasn’t ready to spill the beans on exactly when the changes hit, how steep they’ll be, or which specific devices will feel the pinch first.
Looking ahead, Apple’s still locked in for its fall Pro lineup refresh, but the standard iPhone 18 has been pushed to next year. The upcoming iPhone 18 Pro, Pro Max, and that first-ever foldable iPhone will all pack the codenamed “Borneo” A20 Pro chip. Next year’s base iPhone 18? It’ll run on the “Banda” A20 processor. Meanwhile, development is already underway for the follow-up models using the standard A21 chip, codenamed “Nimos”.
When it comes to manufacturing, Apple’s heavily leaning on TSMC. Back on June 9, TSMC’s CFO Jen-Chih Huang told reporters that inflation has definitely bumped up operating costs, so future price adjustments are on the table—but he firmly shut down rumors of any crazy “four to five times” surges. Earlier, TSMC Chairman and CEO C.C. Wei mentioned during a shareholder meeting that he’d “prefer” raising prices, pointing out that competitors have already made their moves first.
The grind started last year, fueled by the insatiable hunger for AI computing power driving memory and storage prices straight up. Just recently, TrendForce’s latest market survey highlighted that by Q1 2026, AI and data center demands will only worsen the global supply shortage. Manufacturers are holding all the cards, and TrendForce has drastically revised their Q1 growth forecasts: conventional DRAM contract prices are now projected to jump 90%–95% (up from the earlier 55%–60% estimate), while NAND Flash contracts are climbing to 55%–60% (revised from 33%–38%), with even more increases possibly on the horizon.
Speaking of chip giants, TSMC is absolutely cashing in on this memory crunch. For Q1, they raked in 1.13 trillion NTD in revenue (up 35.1% YoY) and posted a record-breaking net profit of 572.5 billion NTD (up 58.3%). Their gross margin hit an impressive 66.2%, totally blowing past market expectations.
The earnings report makes it clear: Q1 revenue spikes were mostly driven by booming AI chip orders, while the traditional smartphone sector saw typical seasonal slowdowns. Thanks to heavy demand from NVIDIA, Broadcom, and other AI leaders, high-performance computing became their top earner, accounting for a solid 61% of total revenue.
Looking forward, TSMC expects Q2 revenue to land between $39 billion and $40.2 billion, with full-year growth topping 30%. Gross margins are projected between 65.5% and 67.5%, hovering right around the updated buyer consensus of 66%–66.5%.
For the broader smartphone scene, though, these memory price hikes are putting real strain on the industry. Beyond flagship devices like iPhones, budget and mid-range phones have already seen sticker prices creep up. Public data shows brands like Xiaomi, OPPO, vivo, and Honor have adjusted pricing across multiple current and upcoming models due to soaring component costs. Mid-tier phones are seeing jumps of roughly $300 to $600, while some premium or foldable models have jumped over $1,000.
During Xiaomi’s new product launch event on May 21, founder Lei Jun got straight to the point about the mounting costs weighing on the phone industry. He pointed out that memory prices are expected to keep climbing for the next two years, forcing device prices upward and making smartphones progressively pricier. “If you’ve been thinking about upgrading your phone within the next year,” he advised, “I highly recommend doing it now.”
All this is starting to squeeze overall smartphone market share. TrendForce estimates that global smartphone production will drop to 1.051 billion units this year, marking a decline of about 16.2%. In a worst-case scenario, if storage prices don’t cool down and brands are forced to keep hiking retail prices, that decline could easily deepen further.
