Apple stockpiles inventory as memory shortages threaten its supply chain

Apple just reported what it called its strongest June quarter ever, with iPhone and Mac sales growing 22% and 29% year-over-year, respectively, beating expectations. But the company is bracing for the memory shortage — dubbed “RAMageddon” — to worsen further. Apple’s biggest challenge is securing the advanced memory nodes that go into its Apple silicon chips, the A-Series and M-Series processors that power iPhones and Macs.

“We continue to expect high levels of demand. However, with less flexibility in supply chain, we expect the impact from the supply constraints to increase significantly sequentially,” Cook said on Apple’s quarterly earnings call. “We’re seeing some very significant constraints currently with limited flexibility in the supply chain to remedy it.”

Apple appears worried enough about the shortage that it reported $11.1 billion in inventory — nearly double the $5.7 billion it reported last September. That marks a break from Cook’s long-held approach of minimizing how much inventory Apple keeps on hand.

The constraints already pushed Apple to “reluctantly” raise the price of Macs and iPads last month, Cook said. Other companies that have raised hardware prices include Meta, Samsung, Microsoft, and Sony.

“We’re going to be scrambling on the supply side, essentially,” Cook said.

For the current quarter, Apple is predicting revenue growth of 9% to 11% year-over-year — below the roughly 16% year-over-year growth it has maintained over the past several quarters. That guidance worried investors: Apple stock dropped 6% in after-hours trading.

Senior VP of Hardware Engineering John Ternus is set to step into the CEO role in September, meaning he could inherit a rough patch for the company’s supply chain — though Apple isn’t alone in facing these constraints.

Why it matters

A near-doubling of inventory signals Apple expects the memory crunch to persist well beyond this quarter, and its slowing growth guidance shows even the biggest hardware makers can’t fully pass rising component costs on to consumers without denting demand.