The AI boom is reshaping the electronics supply chain, and the cost is showing up in the price of the most popular consumer device on the planet. Apple CEO Tim Cook told The Wall Street Journal that price increases on the company’s devices are now “unavoidable” as surging costs for two essential components — DRAM memory and NAND storage chips — squeeze even the world’s most valuable company.
For more than a decade, Apple has ruled the electronics supply chain with its enormous buying power, securing favorable terms for components that other manufacturers could not match. That era has ended, according to a report in the WSJ Technology newsletter this week. The newsletter reported that AI hyperscalers and Nvidia, the dominant maker of AI-training chips, are now buying every available DRAM and NAND chip they can find, paying whatever it takes to secure supply. That has driven up prices across the board and forced even Apple to wait in line.
“Nvidia and other AI hyperscalers are buying every DRAM memory and NAND storage chip they can get, paying through the nose to secure supply,” the WSJ reported. The result, according to Cook in a phone conversation with WSJ reporter Rolfe Winkler, is that price increases for Apple’s customers are “unavoidable.”
The WSJ’s analysis, based on current chip markup and projections from research firm TechInsights, estimates that the base model of the yet-unannounced iPhone 18 Pro could cost $200 or more than its predecessor. The projected price increase reflects the rising cost of the memory and storage components inside every iPhone — components that are now being bid up by a wave of AI infrastructure spending that shows no signs of abating.
Apple’s size had been thought to be a protective moat. Two months ago, when the WSJ first reported that spiking component prices would threaten Apple’s bottom line, some analysts dismissed the concern, arguing that Apple’s scale would guarantee it the supply it needed at reasonable terms even as other companies were squeezed. Cook’s remarks to the WSJ this week confirmed that those assumptions no longer hold.
The shift is a direct consequence of the AI build-out. AI companies require vast quantities of high-performance memory for their training and inference clusters, and their demand is consuming the global supply of the most advanced DRAM and NAND chips. That leaves consumer-electronics companies — including Apple, which sells hundreds of millions of iPhones a year — competing for the same wafers at inflated prices. The cost of those chips, once a small fraction of a phone’s bill of materials, is becoming a significant driver of the device’s final retail price.