The Fruity Cargo Cult Apple has finally discovered that hiding from the AI data centre frenzy does not protect its margins.
According to the Financial Times Job’s Mob warned that sales growth would be weaker than expected and margins would take a kicking from supply chain strains. The AI infrastructure boom has made memory chips pricier.
Apple chief financial officer Kevan Parekh said that revenue would grow nine to 11 per cent in the three months to 30 September. That missed forecasts from the cocaine-nose jobs of Wall Street, who had expected 12 per cent.
Shares fell more than six per cent after hours after Apple chief executive Tim Cook warned that “less flexibility in the supply chain” would “increase significantly”. Cook is preparing to hand the chief executive chair to Apple hardware chief John Ternus in September.
Apple had dodged much of the smartphone slump caused by rising memory and component prices. Now the same AI build-out it has been too timid to join properly is putting the squeeze on its hardware cash machine.
The company had already blamed memory shortages for a 20 per cent price rise on MacBooks and iPads in June. Thursday’s numbers gave investors little comfort about how long the drought will last.
Ternus will have to convince investors he can manage the supply chain that Cook made famous before it started creaking. That is a rough welcome present for a new boss inheriting a gadget maker without much of an AI story.
Job’s Mob recently regained its crown as the world’s most valuable company and briefly touched $5tn in market value. Investors treated it as a haven because it had not joined the bonkers AI spending stampede like other Big Tech outfits.
Cook said supply constraints in the three months to June were mostly caused by stronger-than-expected demand for iPhones and Macs. Manufacturing capacity for Apple’s chips could not keep pace, which is a very expensive way to admit the machine is not as smooth as advertised.
Memory prices are now biting harder and “could drive an increasing impact on our business” into the end of the year, Cook said. He pointed to the problem of relying on three high-end DRAM suppliers, Micron, SK Hynix and Samsung, and said another supplier would help.
Apple has been lobbying the Trump administration for assurances that it can use China’s CXMT in coming years. That has gone down badly with China hawks in Washington, who are not thrilled by Cupertino’s supply chain wish list.
The quarter was not a total bin fire. iPhone sales hit $54.3bn, up nearly 22 per cent year-on-year and ahead of the $53.1bn expected, while revenue reached $109.4bn, up 16 per cent and slightly ahead of forecasts.
China and services revenue still disappointed analysts, even as Chinese sales rebounded 22 per cent. Job’s Mob is widely expected to lift iPhone prices later this year and push parts of the iPhone 18 and iPhone Air launch into next year.
To soften the blow, Job’s Mob has embraced buy-now, pay-later outfit Klarna, letting US customers lease an iPhone from $17.99 a month. Nothing says premium ecosystem like turning your handset into a couch on finance.
