Apple describes the surge in memory prices as a "once-in-a-century flood," suggesting that the DRAM market needs more suppliers

According to a report by Benzinga, Apple's ( AAPL-US) latest financial highlights for the June quarter include record iPhone sales and progress in Apple Intelligence. However, one of the most noteworthy comments came during the Q&A session of the earnings call, when CEO Tim Cook described the surge in memory prices as a "once-in-a-century flood" and hinted that the DRAM industry needs more suppliers.

This statement also rarely revealed how AI demand is reshaping one of the most concentrated markets in the semiconductor industry.

When asked about product pricing, Cook stated that Apple had little choice but to pass some costs onto consumers.

He said, "We reluctantly raised prices. The reason is that I believe memory prices are experiencing a 'once-in-a-century flood,' and memory prices are rising at an exponential rate."

Cook also indicated that Apple expects memory costs to rise further in the future, stating, "We expect to pay higher memory costs."

He pointed out that DRAM prices continue to rise, although some costs can be offset by declines in the prices of non-memory components and inventory purchased at lower prices previously, it is still not enough to fully compensate.

Memory Costs Become the Biggest Pressure on Gross Margin

Apple's CFO Kevan Parekh further emphasized that memory costs have become a significant factor affecting the company's profitability.

He stated that without the impact of rising memory prices, Apple's gross margin would have been significantly higher.

Parekh noted that the increase in memory costs accounted for the entire impact on adjusted gross margin decline from the March quarter to the June quarter, and it is expected to remain the company's largest cost pressure source in the September quarter.

Cook: More Suppliers in the DRAM Market Would Be Better

One of the most striking moments in the earnings call was when Cook was asked about Apple's supply chain strategy. Unlike discussions on how to negotiate with existing suppliers, he directly pointed out the market structure of the DRAM industry itself.

Cook stated, "Currently, there are mainly three suppliers in the DRAM market. If there were more suppliers, that would certainly be a good thing, as it would help us on the supply side and even in terms of pricing... We are evaluating all possible options."

The market considers this statement noteworthy, as Apple rarely discusses supplier concentration issues publicly.

Currently, the global DRAM market is primarily dominated by three companies: Samsung Electronics, SK Hynix ( SKHY-US), and Micron ( MU-US) With the rapid growth in demand for AI servers and high-bandwidth memory (HBM), the overall DRAM supply continues to be tight, giving memory manufacturers stronger pricing power compared to past economic cycles.

Cook did not disclose whether Apple plans to increase new DRAM suppliers, but his remarks indicate that Apple would welcome more capacity in the market.

Memory is becoming the next bottleneck in the AI industry

Apple's comments also reflect significant changes occurring in the semiconductor industry.

In the past, market focus was primarily on AI chips from companies like NVIDIA (NVDA-US), but now, memory has become an indispensable key resource for running large AI models.

As the scale of AI models continues to expand, memory supply is becoming increasingly tight, and prices are rapidly rising across the industry.

Cook's remarks indicate that soaring memory costs are no longer just a positive for memory manufacturers, but are beginning to affect the pricing strategies and profitability of product procurement for one of the world's largest chip buyers, including Apple.

For investors, this again reflects that, in a situation where demand continues to exceed supply, DRAM suppliers remain in a relatively advantageous market position