The iPhone will cost more: Tim Cook says Apple price hikes are 'unavoidable' due to chip shortages

Apple will raise the prices of its devices to offset the rising cost of memory and storage chips—a blow that its outgoing CEO, Tim Cook, now considers impossible to avoid. "Unfortunately, price increases are unavoidable," he said in an interview with The Wall Street Journal.

The statements mark a departure for a company that for years kept prices for its flagship line in check. Cook maintained that the company tried to protect its customers, but that the situation had become unmanageable: “We're doing our best to mitigate the huge increases that are being passed to us, and we've been trying to shield our customers from the increases, but the situation has become unsustainable.”

The executive did not specify when the price hikes would take effect, how significant they would be, or which products they would affect. The company’s next major launch is expected in September, with the release of the iPhone 18, although price increases could come sooner for Macs and iPads: last month, Apple already raised the starting price of the Mac Mini.

Behind the price hike is artificial intelligence. The voracious demand for chips from major tech companies—Google, Microsoft, Meta, and Amazon have skyrocketed their investment budgets since last year—has quadrupled the price of DRAM memory and NAND storage, according to data cited by the newspaper. Cook focused on DRAM and the allocations being snapped up by AI servers. “There's less supply at a time when consumers want devices and the memory guys are passing along huge price increases,” he said.

The impact on consumers’ wallets could be significant. Research firm TechInsights estimates that maintaining profit margins would add about $270 to the next iPhone Pro, while Morgan Stanley forecasts a 15% price increase for phones and computers in the United States this year.

Cook indicated that the company is willing to draw on its liquidity to expand supply. “We're willing to use our balance sheet to help be a part of the solution,” he said, but ruled out manufacturing its own memory: “We can't do everything. We know what we're good at.”

The executive, with more than four decades of experience in the electronics supply chain, described the crisis as unprecedented. “This is a hundred-year flood, I've never seen anything like it in any area in over 40 years.”