Apple warns holiday-quarter gross margin to fall to 45%, squeezed by both rising memory chip prices and Siri AI inference costs
Apple warned that holiday-quarter gross margin will fall from 48% in the September quarter to 45%, due to soaring memory chip prices. Data center builders are absorbing large amounts of supply from a handful of memory makers, forcing Apple to pay for the AI boom through its component bills; CEO John Ternus called this pricing unprecedented and expects costs to keep rising after December. Excluding tariff refunds, memory alone reduced September-quarter gross margin by about 1 percentage point compared with June, while revenue grew 12% to $114.5 billion over the same period. Siri AI is the second drag, with its cloud inference costs hitting services gross margin, and more device revenue being recognized over the product lifecycle.
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Looking at Apple's gross margin decline to see how AI data centers are crowding out memory chips, and how Siri AI cloud inference costs are dragging down services profits.
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FT: Apple warned its holiday-quarter gross margin will slide to 45% (from Sept-quarter gross margin of 48%) as memory chip prices surge.
Data-centre builders are soaking up supply from a few memory makers, so Apple pays for the AI boom through component bills.
John Ternus, in his first earnings call as chief executive, called the pricing “unprecedented” and expects costs to keep rising beyond December.
Excluding tariff refunds, memory alone cut September-quarter gross margin by about 1 point from June, even as revenue rose 12% to $114.5B.
Price rises across Macs, iPads and iPhones, plus memory bought earlier, softened the blow, though Apple expects that stockpile benefit to fade.
Siri AI adds a second drag, since its cloud inference costs hit services margins and more device revenue gets booked over each product’s lifetime.
Budget phone makers fare worse: global smartphone shipments fell 20% last quarter while Apple’s share rose from 18% to 22%.