Apple Builds Inventory as Memory Shortage Threatens Hardware Supply

Apple reported about $11.1 billion in inventory, nearly double the $5.7 billion it reported last September, as it prepares for worsening supply shortages. The move stands out because Tim Cook’s long-running supply chain approach has emphasized keeping inventory low. For readers, the key takeaway is simple: Apple is building a bigger cushion because it expects less flexibility in the supply chain.

The pressure is tied to steep demand for hardware components during the generative AI boom, especially memory. Cook described the situation as “a hundred-year flood [on] memory pricing,” with costs affecting iPhones, MacBooks and other devices. Apple’s challenge centers on securing advanced memory nodes used in Apple silicon chips that power A-Series and M-Series processors.

Apple described its recent earnings report as its “strongest June quarter ever,” with iPhone and Mac sales growing 22% and 29% year over year, respectively. Still, supply constraints have already contributed to Apple “reluctantly” raising Mac and iPad prices, according to Cook. The company is predicting revenue growth of 9% to 11% year over year for the upcoming quarter, below the roughly 16% year-over-year growth it maintained in the last several quarters.

Apple stock dropped 6% in after-hours trading after the update, reflecting investor concern over the expected slowdown. Cook said Apple is seeing “very significant constraints” and added, “We’re going to be scrambling on the supply side, essentially.” With John Ternus set to step into the CEO role in September, supply availability, memory pricing and device pricing will be important signals to watch.