The company significantly built up its supply of computer memory, causing total inventory value to hit $14.54 billion. Rising component expenses are directly pressuring profitability, with gross margin expected to drop to between 45% and 46% in the December period. Meanwhile, component availability issues hampered the tablet segment, driving revenue down 10% year-over-year to $6.2 billion. Executives signaled that memory expenses will continue to climb, leaving the door open for future price increases on hardware.
Key points
Gross margins are projected to fall to between 45% and 46% due to climbing memory expense…: Gross margins are projected to fall to between 45% and 46% due to climbing memory expenses.
Chief Operating Officer Sabih Khan did not dismiss the possibility of additional retail p…: Chief Operating Officer Sabih Khan did not dismiss the possibility of additional retail price hikes on Apple devices.
Chief Executive Officer John Ternus warned that memory costs are anticipated to rise furt…: Chief Executive Officer John Ternus warned that memory costs are anticipated to rise further beyond the December quarter.
Sources checked by our analysis pipeline: 1
Apple’s stockpiling of inventory, particularly computer memory, continued in its fiscal fourth-quarter, according to earnings reported Monday. The company reported that its inventory increased significantly in the quarter, growing from $11.09 billion in Q3 to $14.54 billion in Q4, a jump of 31.1%. Year-over-year, inventory grew 154.3% from $5.72 billion in the fourth quarter of 2025.
Apple’s forecast of a 45% to 46% gross margin in the December quarter was largely attributed to the impact of higher memory costs. The company reported a gross margin of 47.9% for the September quarter.
“What we’re seeing with memory pricing right now is unprecedented,” said Apple CEO John Ternus, speaking to analysts on the call. “As we said earlier in the September quarter, we did see higher memory costs as compared to the June quarter, which were partly offset by the benefit of carrying inventory and lower costs on certain non-memory components.”
He said that the company expected “even higher memory costs” in the December quarter, which would be partially offset by price increases implemented earlier this year on some devices, including Mac…
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