The AI Boom Is Coming for Apple's Profit Margins (msn.com)
- Reference: 0180721836
- News link: https://apple.slashdot.org/story/26/02/02/1741244/the-ai-boom-is-coming-for-apples-profit-margins
- Source link: https://www.msn.com/en-us/money/technology/the-ai-boom-is-coming-for-apple-s-profit-margins/ar-AA1VpgpA
Nvidia has overtaken Apple as TSMC's largest customer, CEO Jensen Huang said on a podcast; Apple had held that position by a wide margin for years. DRAM prices are set to quadruple from 2023 levels by year-end and NAND prices will more than triple, according to TechInsights.
The firm estimates Apple could pay $57 more for memory in the base iPhone 18 due this fall compared to the base iPhone 17 currently on sale -- a significant hit on a device that retails for $799.
[1] https://www.msn.com/en-us/money/technology/the-ai-boom-is-coming-for-apple-s-profit-margins/ar-AA1VpgpA
Death of Apple predicted! (Score:3)
News at 11. Again. I mean... really, this time for sure.
How to compete in an irrational market (Score:2)
How can they compete when the challengers are not required to actually make a profit?
Re: (Score:3)
Wait it out, I guess. Supply will ramp up in response to heightened demand, some of the AI players will fall away, but we’re a long way off consumers deciding they don’t want a new phone every so often. It may end up with overcapacity in the supply chain meaning Apple gets to squeeze suppliers harder a few years down the line. I’m sure all the participants are busy running a ton of sensitivity analyses on different scenarios as they try to play this out.
Re: (Score:2)
Supply won't ramp up when the suppliers know it's a bubble.
Re: (Score:2)
Micron is certainly ramping up. [1]https://www.thestreet.com/tech... [thestreet.com] Both DRAM and NAND. It is a moderately long term expansion(2030).
[1] https://www.thestreet.com/technology/micron-quietly-unveils-project-of-staggering-size
Re: (Score:2)
Over the next ten years with the first wafers nearly three years away.
Re: (Score:2)
TSMC has bigger problem than the guys cranking out RAM and NAND.
There is going to be growth in demand at some profitable price level for those thing AI or no AI.
The demand for leading edge process logic on the other hand, probably flattens quite a lot without an AI bubble to drive it, and I suspect can't justify a lot of new plant beyond what TSMC already has in its own right.
They are in tough place. Build and if the AI bubble pops get left bag holding, don't build and if the AI Bubble holds invite a real c
Re: (Score:2)
I would expect that Apple has forward contracts with most suppliers that will wash out eventually, so if memory prices stay high in the medium to long term margins may fall and/or sale prices rise to compensate. There is also the issue for the suppliers in that do they really want to gouge one of their biggest customers who a) actually sells billions of physical products with memory in them and b) has loads of money and is happy to pay in advance or even bankroll production lines? Most of the major memory m
une soupcon du contraverted pannucleides (Score:2)
What's the "specialized glass fiber" for?
Re: une soupcon du contraverted pannucleides (Score:2)
They'll be used to create fibre interlinks between the AI nodes. Just basic communication. I believe the guys who made the screens glass also make fibre products.
Re: (Score:2)
Meta, for instance, just signed a 6 billion dollar contract with Corning for glass for fiber optic cables.
[1]https://www.cnbc.com/2026/01/2... [cnbc.com]
[1] https://www.cnbc.com/2026/01/27/apple-supplier-corning-wins-6-billion-from-meta-for-ai-optical-fiber.html
yeah, and it will be virtually free (Score:4, Insightful)
The AI companies already booked and paid for the fabs, and once they go belly up, that already-paid-for service will start churning out apple silicon instead of no-longer-needed junk for companies that no longer exist for customers that never existed. Meanwhile, apple will still be charging thousands of dollars for something that cost them nothing.
Classic anti-Apple FUD (Score:2)
Consider: (1) Apple is doing on-chip integrated memory. So they're not competing for separate DRAM chips. They would compete for flash components. (2) Apple negotiates long-term, 'preferred treatment' contracts with its suppliers. It's quite likely the contracts for this year's iPhone production run are set, and possibly next year's too. (I don't know and I don't think Apple says what their supply chain lead times are.) (3) Anyone competing in the market for memory chips would be in the same situati
Re: (Score:2)
the article is your regular slop but "cut into apple's profit margin" is hardly a doom call, specially when apple has been long enjoying a dominant position over suppliers and the ability to dictate prices while still selling at a premium. if their margin isn't huge for sure it isn't because of supply costs.
this could ofc mean that their product will become even more overpriced for customers, and probably will, but i bet most won't care or even be premium happy with it. the price of iphones started to soar
Re: (Score:2)
Apple records a massive increase in iPhone sales, particularly in China, and record results in high-margin Services. So what's the headline here? "Apple might have to raise prices or drop margins due to memory costs" (as if that's unique to Apple.) I believe the technical term for that is "bullshit."
Re: (Score:2)
bullshit, slop, noise ... this indeed is regular online entertainment. people make a living with inane charlatanery, slashdot making a living by regurgitating it, we granting them our precious attention, clicks, comments, business as usual. but in fairness ... it still isn't a doom call. you made me skimread the fricken article, nowhere it spells doom. that's just the magic happening in human brains when exposed to headlines.
Re: (Score:2)
> this could ofc mean that their product will become even more overpriced for customers, and probably will, but i bet most won't care or even be premium happy with it.
Historically, Apple's customers will accept higher prices (as long as they are told that the new device is the best ever). And it is not as if most of the alternatives are not also increasing in price for roughly the same supply issues.
It is always possible that people will just stop purchasing new laptops/phones for a few years until the prices seem more rational, but the American consumer usually just pays (and grumbles).
Apple will profit (Score:2)
Apple's profit margins will not be impacted long term, as they will increase the price of their new iShiny to compensate for their higher costs. And they are preparing for that price increase with the statements in the earnings call. They are likely to eat some of the increase for the current devices as long as they can, but they will almost certainly increase the price for upcoming products and refreshes.
Re: (Score:2)
Yeah, given that Siri hasn't been all that successful and Apple hasn't been at the top of the AI wave, they'll probably come out the strongest when this bubble pops. Whereas it'll be ugly for Nvidia and AMD. As well as OpenAI
The AI crash (Score:2)
The AI crash is coming for not only the profits but the capital of everyone who thought there was going to be some trees-growing-to-the-sky "AI" miracle, so there's that.
that App Store cut will be "adjusted" (Score:3)
and it won't be downwards
This won't last long (Score:2)
The AI companies are bleeding cash out of every orifice. They're throwing money around without even thinking. Buy whatever building we can get our hands on! Power grid issues? Buy jet engines! Maybe nuclear! Need more chips? Buy the entire TSMC production capacity and sign a 6 year locked-in contract. Price? Pffffff whatever they want. Why are you asking questions about revenue or ROI? What are you, some sort of boomer? The singularity is coming in 12 months and you better be on this train or you'll lose ou
Re: (Score:2)
That sounds more probable and in line with Apple's modus operandi for the last 25+ years. Don't be the first one to the table, but make sure to clean everyone's plate before you get up. They'll probably take the same stance on AI - wait for all the flash-in-the-pans to go up in smoke and sweep in with a solution that everyone was shooting for at pennies on the dollar. It's the difference between bleeding edge and cutting edge as to who is holding the knife and who is being cut.
Re: (Score:1, Insightful)
Good? Glad youre happy that these costs will just be passed onto the consumer.
This is bad for everyone not just the Apple users you likely abhor and the gay comment is disgusting.
Youre the typical low ID number slashdotter whos become an asshole in his middle age.
Re:Good (Score:4, Funny)
> Youre the typical low ID number slashdotter whos become an asshole in his middle age.
Don't worry, in a few more years it'll make more sense to you. What you think is an insult, really isn't.
Re: (Score:2)
> Youre the typical low ID number slashdotter whos become an asshole in his middle age.
The people you're describing are past middle aged. They moved into the "everything new is scary" and "why can't things be like the old days" stage of their lives.
Re: (Score:3)
No you luddites are the ones with the "Everything new is scary" BS.
I've been pro new tech:
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