Shares of Apple (AAPL +4.88%) sank on Thursday after the tech titan was forced to raise prices across several of its popular products.
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Surging component costs are denting Apple's margins
Artificial intelligence (AI) has been a boon for many chipmakers. Memory maker Micron reported blowout results on Wednesday, with its revenue more than quadrupling.
But Micron's gain in Apple's pain. Soaring prices for memory chips and storage are driving up Apple's costs.
To preserve its margins, the iPhone maker was forced to institute a series of price hikes on Macs and iPads.
NASDAQ: AAPL
Key Data Points
"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," CEO Tim Cook said in an interview with The Wall Street Journal earlier this month.
Here are some of the notable price changes:
- Base model MacBook Neo up $100 to $599
- MacBook Air with 512 gigabytes of storage up $200 to $1,299
- MacBook Pro with 1 terabyte of storage up $300 to $1,999
The downside of price increases
Although these price hikes will bolster Apple's gross margins, they're also likely to dent sales.
Worse still, the situation could continue to deteriorate.
During its earnings call on Wednesday, Micron CEO Sanjay Mehrotra said he expects memory supply constraints to persist beyond 2027.
