Apple is beginning to feel the impact of a global memory chip shortage, CEO Tim Cook revealed during the company’s first-quarter earnings call. Despite strong sales and record-breaking demand for its latest products, Apple is facing mounting pressure on margins due to rising memory costs and constrained supply. Cook reported that iPhone revenue surged 23% year-over-year, driven by customer response that "exceeded our expectations." Apple posted revenue of $143.76 billion and earnings per share of $2.84, both surpassing analyst forecasts. However, the surge in demand left Apple with "very lean" inventory levels at the end of the December quarter, forcing the company into what Cook described as "supply chase mode." The primary constraint, he said, is limited access to advanced chipmaking nodes used in Apple’s custom-designed system-on-a-chip processors. At the same time, heightened demand across the tech industry has reduced flexibility throughout Apple’s supply chain. While memory shortages had minimal impact on Apple’s gross margin in the December quarter—around 48%—Cook warned that the situation is expected to worsen in the second quarter. The company now forecasts a gross margin range of 48% to 49%, with memory costs playing a growing role in margin pressure. “We do continue to see market pricing for memory increasing significantly,” Cook said. “As always, we’ll look at a range of options to deal with that.” Apple’s stock rose about 2% in after-hours trading following the results. The broader tech industry is experiencing a severe memory chip shortage, driven by skyrocketing demand from AI companies, smartphone manufacturers, and PC makers. Memory components are essential not only for consumer devices but also for powering large language models and AI infrastructure. At CES 2026, Nvidia CEO Jensen Huang described the memory market as “completely unserved,” calling it the future “working memory of the world’s AIs.” He highlighted the massive scale of context and token memory required by modern AI systems, which are straining existing supply. South Korea’s major memory producers, Samsung Electronics and SK Hynix, reportedly plan to raise server DRAM prices by 60% to 70% in the first quarter compared to the previous quarter. Market research firm Counterpoint Research estimated that memory prices could climb up to 40% through the second quarter of 2026. An analyst from International Data Corporation noted in a December report that the memory market is at an “unprecedented inflection point,” with demand far outpacing supply. The rapid expansion of AI infrastructure has broken the industry’s traditional boom-and-bust cycles. “This signals the end of an era of cheap, abundant memory and storage, at least in the medium term,” the analyst added, underscoring a fundamental shift in the technology supply chain.