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Apple Forecasts Margin Drop in Holiday Quarter Due to Rising Memory Costs
Sentiment: NeutralHigh Priority
What Happened?
Apple warned that rising memory chip costs will pressure its gross margin for the holiday quarter, projecting a drop to 45%-46%. Despite strong iPhone 18 Pro demand, shares fell 2% after the announcement.
Key points
- Apple expects gross margin of 45%-46% for the December quarter, down from 47.9%.
- Services revenue growth is forecasted at 8%-9%, below the 10.7% expected by analysts.
- Fiscal fourth-quarter sales reached $114.48 billion, exceeding analyst estimates.
- Apple's new iPhone Duo faces supply constraints, with no timeline for balance.
- Memory costs are expected to continue rising into next year.
Key insights
- Apple's ability to manage rising component costs will be crucial for maintaining competitiveness.
- The staggered launch strategy may help stabilize revenue throughout the year.
- Customer feedback on the iPhone Duo's display issues could affect future sales and brand perception.
Why it matters
The forecasted margin drop could impact Apple's profitability during a key sales period.
Entities
Apple· CompanyJohn Ternus· PersoniPhone 18 Pro· ProductiPhone Duo· ProductMicron· Company
Source
Business Standard
