Apple plans to raise product prices to offset surging memory and storage chip costs, which CEO Tim Cook called “unsustainable”. Driven by massive AI demand, memory prices have skyrocketed, shifting the valuation of key suppliers like Micron Technology to new records.
The Apple Supply Squeeze
- Soaring Costs: Memory and storage costs for smartphones and PCs have surged 80–90% compared to late 2025. Consequently, memory’s share of Apple’s total Bill of Materials (BOM) has jumped from the mid-teens to roughly 25-30%.
- The “Hundred-Year Flood”: With data centers and AI companies consuming dwindling memory supplies, Apple can no longer absorb the price shocks using its traditional negotiating leverage.
- Consumer Impact: The price increases are unavoidable. Wall Street analysts project an average selling price increase of $100 to $200 on upcoming hardware, which will allow Apple to protect its gross margins.
The Rethinking of Micron’s Valuation
- AI-Driven Demand: Surging enterprise and data center demand for high-bandwidth memory (HBM) has fundamentally altered the market.
- Record Performance: Micron Technology shares have surged nearly 300% in 2026, notching dozens of record closes and pushing its market cap over $1.2 trillion.
- Re-evaluating Multiples: Investors are rethinking Micron’s historically low forward price-to-earnings (P/E) ratio as Wall Street recognizes a sustained structural shift in memory pricing power.
