6 hours ago
Apple has agreed to DRAM pricing at $2 per Gb in the new year, up from $1.50 today. With spiking demand and supply struggling to catch up, things are going to get much worse before they get better.
Former Apple CEO Tim Cook called the AI-driven RAM shortages a "100-year flood" that would inevitably lead to product price increases. Those price increases came for nearly every existing product but the iPhone, but then a $100 increase spread across the existing iPhone lineup in September.
A social media post from user @SemiconductorsX shared supply chain data that suggests things will only get worse from here. Apple already pays $1.50 per Gb of DRAM, and it was quoted for 2027 memory from Samsung at $2.00 per Gb.
The post was made on September 14, noting that Apple hadn't taken the deal yet. A separate report on Wednesday from Digitimes says that Apple has indeed taken that deal.
At $2.00 per Gb, prices will no doubt have to be raised again in 2027. However, it isn't clear exactly how Apple might approach another round of price increases.
The company avoided immediate price increases before through supply chain management and eating some costs. The price hikes in June were the end point after months of attempting to avoid hitting customers with higher prices.
The report suggests that demand will go up 36.2% while supply will only rise by 19.3%. The gap between supply and demand will increase from -8.1% in 2026 to -13.6% in 2027.
That gap will likely remain through at least the first half of 2028.
The AI-induced RAM problem
Consumer-grade memory is made by the same companies that make the giant wafers needed to power AI data centers, called High Bandwidth Memory. The more demand AI companies have for HBM, the less manufacturing capability is reserved for consumer-grade products.
![[Image: 69021-145522-Mac-Studio-under-display-xl.jpg]](https://media.appleinsider.com/gallery/69021-145522-Mac-Studio-under-display-xl.jpg)
Mac Studio quickly exceeds $10k thanks to RAM prices
No, you can't take the RAM built for data centers and cut it for smartphones. Every process focusing on the larger wafers is essentially lost to the smartphone supply chain.
The primary driver behind all of this are companies like NVIDIA, SpaceXAI, OpenAI, Microsoft, Google, and Anthropic pushing for more data centers. Apple plays a part in this with its demand for Private Cloud Compute, but to a much lesser extent given how its AI functions.
Each of those companies is buying land, staking them out for future data centers, then pre-purchasing the RAM and other compute needed for the non-existent data centers. To make matters more precarious, much of the money for these land and equipment buyouts comes from financing against the perceived value of the future data center.
So, to put it simply, your iPhone, iPad, and Mac are more expensive because companies promising AI will end humanity are saturating the supply chain with pre-orders using money they don't have. There is more capacity that will come online in 2028 or 2029 for more RAM production, but it remains to be seen if it will have any effect on supply if demand keeps growing.
This, in essence, is the AI bubble I've been describing repeatedly in previous reporting. The promise of more demand for features that don't exist leads to more investment dollars that pay for hardware that hasn't been built to power the features that don't exist.
For example, OpenAI has paused its public offering and is asking for another investment round of about $1 trillion. OpenAI loses $1.25 for every dollar it earns, and when considering all of the AI companies (minus Apple), there are trillions unaccounted for on the books.
It's only a matter of time before the farce collapses on itself. Given that so much of the global economy is balanced on this AI-driven inflation, it's not going to be good for anyone when it happens.
The only way out of this is for all of the AI companies to take a more sensible approach to producing and distributing AI tools. Apple has shown how a more careful, considered, and even private approach can still provide tools that are useful to an entire user base.
![[Image: 69021-145521-iPhone-Duo-back-cameras-xl.jpg]](https://media.appleinsider.com/gallery/69021-145521-iPhone-Duo-back-cameras-xl.jpg)
iPhone Duo is Apple's first smartphone to exceed $3k
Of course, that's not going to happen. The fear mongers keep saying AI will "kill us all" — maybe not, but the world will suffer as a result of this totally unnecessary hype cycle.
The iPhone 18 Pro and iPhone 18 Pro Max increased the base model price by only $100. Apple subsidized that cost by raising higher storage tiers more, with the 2TB iPhone Duo exceeding $3,000.
Apple has proven quite resilient to the RAM crisis so far, but nothing lasts forever. Expect more price increases across new products into the new year, then as the iPhone 18 launches in the spring, more will likely come.
Former Apple CEO Tim Cook called the AI-driven RAM shortages a "100-year flood" that would inevitably lead to product price increases. Those price increases came for nearly every existing product but the iPhone, but then a $100 increase spread across the existing iPhone lineup in September.
A social media post from user @SemiconductorsX shared supply chain data that suggests things will only get worse from here. Apple already pays $1.50 per Gb of DRAM, and it was quoted for 2027 memory from Samsung at $2.00 per Gb.
The post was made on September 14, noting that Apple hadn't taken the deal yet. A separate report on Wednesday from Digitimes says that Apple has indeed taken that deal.
At $2.00 per Gb, prices will no doubt have to be raised again in 2027. However, it isn't clear exactly how Apple might approach another round of price increases.
The company avoided immediate price increases before through supply chain management and eating some costs. The price hikes in June were the end point after months of attempting to avoid hitting customers with higher prices.
The report suggests that demand will go up 36.2% while supply will only rise by 19.3%. The gap between supply and demand will increase from -8.1% in 2026 to -13.6% in 2027.
That gap will likely remain through at least the first half of 2028.
The AI-induced RAM problem
Consumer-grade memory is made by the same companies that make the giant wafers needed to power AI data centers, called High Bandwidth Memory. The more demand AI companies have for HBM, the less manufacturing capability is reserved for consumer-grade products.
Mac Studio quickly exceeds $10k thanks to RAM pricesNo, you can't take the RAM built for data centers and cut it for smartphones. Every process focusing on the larger wafers is essentially lost to the smartphone supply chain.
The primary driver behind all of this are companies like NVIDIA, SpaceXAI, OpenAI, Microsoft, Google, and Anthropic pushing for more data centers. Apple plays a part in this with its demand for Private Cloud Compute, but to a much lesser extent given how its AI functions.
Each of those companies is buying land, staking them out for future data centers, then pre-purchasing the RAM and other compute needed for the non-existent data centers. To make matters more precarious, much of the money for these land and equipment buyouts comes from financing against the perceived value of the future data center.
So, to put it simply, your iPhone, iPad, and Mac are more expensive because companies promising AI will end humanity are saturating the supply chain with pre-orders using money they don't have. There is more capacity that will come online in 2028 or 2029 for more RAM production, but it remains to be seen if it will have any effect on supply if demand keeps growing.
This, in essence, is the AI bubble I've been describing repeatedly in previous reporting. The promise of more demand for features that don't exist leads to more investment dollars that pay for hardware that hasn't been built to power the features that don't exist.
For example, OpenAI has paused its public offering and is asking for another investment round of about $1 trillion. OpenAI loses $1.25 for every dollar it earns, and when considering all of the AI companies (minus Apple), there are trillions unaccounted for on the books.
It's only a matter of time before the farce collapses on itself. Given that so much of the global economy is balanced on this AI-driven inflation, it's not going to be good for anyone when it happens.
The only way out of this is for all of the AI companies to take a more sensible approach to producing and distributing AI tools. Apple has shown how a more careful, considered, and even private approach can still provide tools that are useful to an entire user base.
iPhone Duo is Apple's first smartphone to exceed $3kOf course, that's not going to happen. The fear mongers keep saying AI will "kill us all" — maybe not, but the world will suffer as a result of this totally unnecessary hype cycle.
The iPhone 18 Pro and iPhone 18 Pro Max increased the base model price by only $100. Apple subsidized that cost by raising higher storage tiers more, with the 2TB iPhone Duo exceeding $3,000.
Apple has proven quite resilient to the RAM crisis so far, but nothing lasts forever. Expect more price increases across new products into the new year, then as the iPhone 18 launches in the spring, more will likely come.