Memory Price Surge Threatens Tech Giants: Intel's Warning and Apple's Looming Challenge
Global technology companies are facing a significant memory-price crunch that has already impacted Intel's financial outlook and could soon create challenges for Apple and other smartphone manufacturers. The surge in memory component costs, driven primarily by artificial intelligence hardware demand, is creating ripple effects across the consumer electronics industry.
Intel's Downbeat Outlook and Memory Cost Concerns
Intel recently flagged the soaring cost of memory components as one of the key factors contributing to the chip company's downbeat outlook. Intel CFO David Zinsner told Barron's that memory prices could present a substantial challenge in the second half of the year, despite the company having secured supply for the first two quarters.
According to Counterpoint Research, demand for memory components in artificial-intelligence hardware will send costs surging 40%-50% in the current quarter, following a similar gain in the final quarter of 2025. This dramatic increase is creating significant headwinds for companies that rely on these components for their products.
Benchmark analyst Cody Acree highlighted the situation in a research note, stating: "Intel did note that higher component costs, particularly related to increased memory prices, and wafer substrate supply constraints, were likely to negatively impact unit volumes, and Intel's revenue potential, to some unknown degree." Acree maintains a Buy rating on Intel stock with a $57 target price.
The market reaction was immediate, with Intel shares falling 13% in premarket trading to $47.10 amid disappointment about the earnings report and a lack of customer announcements for its chip-manufacturing operations.
Why Apple Could Be the Next Victim
While memory and storage companies such as Micron Technology, Sandisk, Seagate Technology and Western Digital are enjoying a boom from AI-related demand, the situation is less favorable for makers of personal computers and mobile phones. Memory-chip companies have strategically shifted production toward components used in AI data centers instead of expanding conventional DRAM and NAND used in smartphones, PCs, and other consumer electronics.
This production shift could be particularly worrying for Apple. According to research firm IDC, memory can make up around 10%-15% of the total bill of materials for a high-end smartphone such as an iPhone. As memory prices continue to climb, this represents a significant cost pressure for the technology giant.
UBS analyst David Vogt addressed this concern in a research note this week, writing: "Despite [Apple's] supply agreements that likely mitigate the impact of rising memory costs in the March quarter guide, risk does increase in the June and Sept quarters as production of the next generation of iPhones ramps up, impacting cost and margins."
The memory-chip crunch could mean a hit of between 50 and 100 basis points to UBS's forecast for Apple's gross margin, which stands at 48.0% in June and 47.8% in September. Vogt has a Neutral rating on Apple stock with a $280 target price. Apple shares were down 0.1% at $248.19 in premarket trading following these developments.
Broader Implications for the Technology Industry
The current memory-price situation reveals several important trends in the technology sector:
- AI hardware demand is reshaping component markets, creating winners among memory suppliers but challenges for consumer electronics manufacturers
- Supply chain dynamics are shifting as producers prioritize high-margin AI components over traditional consumer electronics memory
- Cost pressures are mounting for companies across the technology spectrum, from chipmakers to device manufacturers
- Financial impacts are becoming visible through stock price movements and analyst adjustments to forecasts and ratings
As the situation develops, technology companies will need to navigate these challenging market conditions while maintaining product quality and competitive pricing. The memory-price crunch serves as a reminder of how interconnected the technology ecosystem has become, with developments in one sector creating significant effects across multiple industries.
