Apple’s price hike isn’t just an AI problem

Last week, in Exclusive interview with The Wall Street JournalOutgoing Apple CEO Tim Cook has warned that the memory chip crisis has made price increases “inevitable”. He also made what sounded like a promise: “We are willing to use our balance sheet to help be part of the solution.”

So much for that. On Thursday, Apple was shocked by a huge… Price increases For many of its famous devices. MacsiPad, Vision Pro, HomePods, and Apple TV products All of them witnessed price increases ranging from 15% to more than 30%.. Even budget-friendly models, like the MacBook Neo and Refurbished deviceswere not exempt, although iPhones and AirPods are currently exempt.

Rising memory costs and supply shortages have shattered any belief that one of technology’s most successful giants would protect its customers from corporate wrath. Ramageddon. It’s a pattern that’s becoming increasingly common across the consumer electronics industry.

Microsoftmotorola, Samsung And now Apple has blamed rising component costs — driven largely by AI data centers consuming all available RAM — for pushing up prices for everyday people.

This does not mean that inflation is not real. Smartphones rely on DRAM for short-term memory and NAND flash for short-term storage, both of which are also essential for data centers. Like these Energy-hungry AI warehouses Faced with bottlenecks while processing larger, high-bandwidth workloads, chipmakers are racing to increase supply, driving up prices across the industry.

“The unprecedented growth of AI infrastructure has changed the semiconductor supply chain, driving unsatisfied demand.” Neil Shah saidvice president of research at global technology research firm Counterpoint. “The situation is not expected to get better, at least over the next two years.”

Are the profits of big technology companies just a mirage?

After months of absorbing the high costs of memory and storage chips, which have become… Four times the price Since 2025, Apple says it can no longer absorb the costs. “We have never seen ingredient prices increase this much and this quickly,” a company representative told CNET via email.

But with big tech companies sitting on some of the largest piles of cash in history while reporting consistently strong profit margins, many loyal customers are angry about being forced to foot the bill. Or maybe millions of Americans don’t notice because they’re too busy taking paycheck deductions to cover groceries, rent, insurance and utility bills, after years of tariffs and inflation.

On the face of it, there’s rarely been a better time to be a major technology company. The Magnificent Seven, a nickname for the most dominant companies in the stock market, includes Apple, Microsoft, Alphabet (Google), Amazon, Nvidia, Meta, and Tesla. Its huge market capitalization has obscured the dilapidated state of the “normal” economy outside Wall Street, which to most of us appears to be running on steam.

Chipmaker Nvidia has become the world’s most valuable company, achieving a record value of $4.7 trillion. SpaceX IPOwhich included artificial intelligence developer xAI, made Elon Musk the world’s first trillionaire (For a week or so, at least). AI developers like OpenAI, Anthropic, and Google have raised millions of dollars in investor funding on the promise that their products will change the world.

Despite not being a major player in the AI ​​gold rush (or maybe… because The company took over A cautious approach to spending on artificial intelligence), Apple maintains industry-leading profit and reporting margins $112 billion in net income in 2025. For the second quarter of 2026, the company reported revenue growth of 17%, exceeding investor expectations.

Except that the financial narrative around AI is starting to change. like Big Tech companies are shedding trillions in funding AI server farms that are larger than ever — and turning to debt markets for cash — face new uncertainties. Consumers don’t see a clear return, and investors want tangible returns. Artificial intelligence increasingly looks like a huge money pit.

Are rising prices really “inevitable”?

Although the silicon crisis is real, shifting the burden to consumers is difficult option. If any company has the resources to overcome chip shortages and absorb high component costs, it’s Apple. Cupertino’s good profit margins helped it weather supply chain disruptions and difficult economic waves better than others, even during the crisis period. The Covid decline and the subsequent period of peak inflation.

Anshil Saag of More Insights He told CNET that Apple is simply not immune to global market forces. Sage said he believes the tech giant held off on raising prices for as long as possible, thus gaining a competitive advantage in the short term. But things have changed now.

“We are now so deep (nearly a year) into the memory shortage that all attempts to stock inventory or anticipate price increases have likely been exhausted, and Apple must now raise prices,” Sage said via email.

The question then is whether Apple can choose to absorb lower profit margins rather than pass these higher costs on to consumers. Within Silicon Valley, Apple is not struggling, with a net profit margin of 27%, according to the British Daily Mail. Megatrend data. This would make these price increases a calculated business decision rather than an economic inevitability.

In a post on the X website, US Senator Bernie Sanders accused Cook on corporate greed, noting that the company spent $310 billion on stock buybacks, which artificially increases stock prices and benefits company executives and highly invested shareholders.

“These price increases are not inevitable. They are unacceptable,” Sanders said.

Are we supporting an AI gold rush?

Over the past year, we’ve seen major tech conglomerates like Google, Microsoft, Meta, and Amazon spend huge sums of money to build massive AI computer systems. These hyperscalers have paid big sums to secure the available supply of components needed for generative AI and large language models, or LLMs — which then drives up prices in the rest of the tech industry.

Apple, meanwhile, is intentional He sat out the race for huge spending on AI infrastructure. Instead of spending money on its own AI data centers and cloud warehouses, the company is now integrating Google Gemini models to power AI-upgraded Siri, while continuing to rely on its own private cloud computing services. At its annual WWDC event earlier this month, Apple made a renewed push into artificial intelligence, unveiling Apple Intelligence offerings have been fixed.

But Apple’s initial restraint did not protect it from supply chain repercussions. In an exclusive interview last week with Cook, Wall Street Journal It stated that Apple has lost some of its historical buying leverage with suppliers as AI companies have secured market share. Now he has to catch up.

Cook, who is set to step down as CEO on September 1, had also hinted during the interview that the company could draw on its own cash reserves to secure memory supplies, which could have protected customers from rising prices. CNET asked Apple why it didn’t eventually tap into its cash reserves, but didn’t get a response.

“Apple is between a rock and a hard place in this situation,” Sage said. “Memory suppliers have all the leverage, and Apple investors won’t let them eat the cost difference.”

This leaves us, ordinary people, subsidizing the high costs of AI, even if we never use the technology or ask for it. For many years, Apple has done well with a subpar AI virtual assistant, while Google has led the way. Siri’s shortcomings, which have long been a source of criticism for responses like “I’m sorry, I didn’t get that,” have done little to dampen demand for Apple products.

In fact, despite the tech industry’s ongoing push for AI ubiquity, the technology isn’t enough to entice consumers to switch: only 11% of smartphone owners would upgrade for new AI features. According to a CNET poll.

Will the technology ever be affordable?

Even if higher input costs justify some of Apple’s recent price increases, price premiums go beyond just covering expenses. Take the entry level MacBook Neomarketed as an affordable option for students, saw a $100 jump in price just months after its launch, despite no meaningful improvements in hardware features or functionality.

As my colleague Matt Elliott pointed out, Apple appears to be using this term widely You mentioned a lack of memory As a suitable cover to raise the price of NEO. In fact, the company has exhausted its initial supply of surplus smartphone processors for budget laptops and is now facing higher production costs for the new A18 Pro chips.

While the chip shortage explains some of the pressure on Apple, the company has treated the matter as if it were a blank check. These massive price hikes could have consequences, including reducing buyer demand, because fewer of us can afford Apple products. Apple could also take a hit to its public image, as higher costs would likely reinforce the brand’s reputation as “elitist” — although critics have been making that point for years.

In addition, an unprecedented rise in prices could scare off investors – in fact, it has already happened. After prices rose on Thursday, Apple The stock price fell by more than 6%This is its worst one-day drop in more than a year.

However, the tech giant will likely overcome these hurdles without taking a major hit to sales, according to Business Insider. Francisco GeronimoVice President of Client Devices at IDC. “While higher prices can prompt budget Android buyers in emerging markets to delay a purchase or switch to a cheaper brand, the typical Apple customer tends to accommodate that,” Geronimo said.

This is largely because Apple has unique market power that stems from its loyal customer base. It has developed financial resilience from this retention and a tightly integrated ecosystem. When you have an iPhone, an Apple Watch, AirPods, and a MacBook, giving up one of them means disrupting your entire digital lifestyle.

And Apple knows that.

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CNET’s Caitlin Chedraoui and Blake Stimac contributed to this story.