Apple Ramps Up Memory Chip Stockpiles Amid Unprecedented Price Surge

Technology giant Apple is increasing its memory stockpiles as a precautionary measure to cope with the unprecedented rise in computer memory chip prices and maintain a stable supply chain. As a result, the company’s total inventory in the fourth quarter surged 154.3 per cent year-on-year to $14.54 billion.

Unprecedented Memory Chip Prices and Future Outlook

Speaking at Apple's latest quarterly financial results conference, the company's Chief Executive Officer (CEO), John Ternus, said, “The price increases we are seeing in the memory chip market are unprecedented.”

He made it clear that although some of the additional memory costs in the September quarter were offset by lower prices for other components and the benefit of existing memory stockpiles, memory-related expenses would rise further in the December quarter.

This will directly affect the company's gross margin. Apple recorded a gross margin of 47.9 per cent in the September quarter, but forecasts suggest it will decline to between 45 and 46 per cent in the December quarter. To cope with rising costs, the company had already increased the prices of its Mac and iPad devices slightly in June this year, followed by iPhones in September.

Chief Operating Officer (COO) Sabih Khan has indicated that Apple may once again adjust or increase the retail prices of its devices if memory component costs continue to rise.

iPad Sales Hit by Supply Shortages

The overall impact of the chip shortage has become evident in Apple's iPad segment. While sales of other devices have been moving upward, iPad sales fell short of expectations because of shortages of memory and other components. Revenue from the iPad segment reached $6.2 billion during the quarter, below analysts' forecast of $6.7 billion and approximately 10 per cent lower than the same period last year.

Assuming that memory prices will continue to rise, Apple has increased its purchase commitments to component manufacturers by a further $33 billion. This reflects the company's aggressive efforts to secure memory supplies globally.

//DBTech/BMT/OR//