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Apple warned investors that its gross margin will decline in the December quarter, the company’s most important sales period. Rising memory-chip costs and spending on its Siri AI rollout will weigh on profitability.
The iPhone maker expects gross margin of 45–46% for the holiday quarter. That is down from 47.9% in the July–September quarter. Apple made the forecast while reporting results that beat Wall Street expectations on revenue and profit.
Apple said the cost of memory chips will continue to rise, putting pressure on its product margins. The company is taking steps to secure supplies but expects limited availability to persist across products such as Macs, iPads and iPhones.
The pressure reflects a broader surge in memory prices, driven by demand linked to artificial intelligence. Apple’s finance chief, Kevan Parekh, said, “The company expects memory costs to keep rising into next year. Memory is a key component across Apple’s hardware portfolio.”
Higher component costs can reduce Apple's profit per device unless it raises retail prices, changes product configurations or negotiates better terms with suppliers.
The margin warning comes despite a positive revenue outlook. Apple expects revenue to grow 7–10% in the holiday quarter, ahead of Wall Street estimates. The company said the period would likely be its biggest quarter ever.
That means Apple still expects robust demand for iPhones, Macs, iPads and services. The challenge is that higher component costs may prevent it from converting that demand into the same level of profitability.
Apple’s guidance shifts attention from sales growth to cost control. Investors will focus on pricing actions, supply agreements and the pace of Siri AI spending in coming quarters.
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