Apple records peak sales as Tim Cook steps aside, but chip supply concerns grow

Apple delivered its strongest March-quarter performance to date on Thursday, even as outgoing CEO Tim Cook cautioned that rising memory chip costs could pose near-term challenges for the business.

“Today Apple is proud to report our best March quarter ever, with revenue of $111.2 billion and double-digit growth across every geographic segment,” Cook said during the company’s earnings call. “iPhone achieved a March quarter revenue record, fueled by such extraordinary demand for the iPhone 17 lineup.”

Despite the strong performance, Cook also highlighted growing pressure from the supply side. He noted that Apple spent more on memory chips in the March quarter than in previous periods. However, those costs were partially offset by sales from existing inventory reserves. Looking ahead, however, he warned that the company expects “significantly higher memory costs” starting in June and continuing beyond, which could “drive an increasing impact” on overall business performance.

The warning ties into what industry observers have dubbed “RAMageddon,” a trend driven by surging demand for memory components as artificial intelligence systems require increasingly large amounts of hardware resources. This surge has contributed to shortages and rising component prices across the tech sector. As a company heavily reliant on hardware sales, Apple is particularly exposed to these pressures.

One of the most affected product lines is the iPhone. Even with strong reported sales, earlier reports have indicated that memory costs have surged dramatically, increasing production expenses and adding pressure for incoming CEO John Ternus, who is set to take over leadership.

A potential consequence of these rising costs could be higher retail prices for iPhones. “There’s just a little less flexibility in the supply chain at the moment for getting more parts,” Cook said in comments to Reuters on Thursday.

Ternus, currently serving as Apple’s senior vice president of hardware engineering, also appeared on the earnings call and paid tribute to Cook’s leadership. “In my view, Tim is one of the greatest business leaders of all time. Stepping into the role of CEO is an incredible honour, and it means a great deal to me to have Tim’s trust and confidence,” he said.

Ternus will officially assume the CEO position on September 1. While he steps into the role at a time of both strong financial performance and emerging supply chain challenges, he will continue to have access to Cook’s expertise. Cook is expected to remain with the company as executive chairman, providing continuity as Apple navigates its next phase.