Apple inventory hits $14.5 billion as memory chip costs rise

Apple’s fourth fiscal quarter inventory reached $14.54 billion, a 154% surge compared to the $5.72 billion reported in the same period last year. The company expects these rising component costs to impact its bottom line, forecasting a decline in gross margin to between 45% and 46% for the upcoming December quarter, down from 47.9% in the September period.

During the earnings call, executives confirmed that memory chip prices have experienced significant volatility. To mitigate potential supply shortages, Apple increased its production purchase commitments by $33 billion between the June and September quarters. CEO John Ternus noted that while existing inventory reserves have helped offset some price pressures, these advantages are expected to diminish as costs continue to climb into next year.

Management also addressed the impact of component costs on retail pricing. While Apple implemented price increases for select Mac, iPad, and iPhone models earlier this year, COO Sabih Khan did not rule out further price adjustments if component costs remain elevated.

Separately, supply chain constraints hampered performance in the tablet division, with iPad revenue falling 10% to $6.2 billion, missing analyst expectations. As component costs are projected to remain high through the end of the year and beyond, the company remains focused on managing its supply commitments to maintain hardware production.