Apple warns gadget prices to rise past £2,000 due to AI memory costs
AAPL•Apple CEO Tim Cook said gadget prices will rise as contract DRAM prices doubled in Q1 2026, now accounting for up to 25% of phone production costs. He warned top iPhone models could exceed £2,000 and analysts expect the cheapest iPhone 18 to carry at least a £100 premium.
1. Price Increase Warning
Tim Cook said higher prices across Apple’s gadget range are now unavoidable and will persist until memory costs return to reasonable levels. He did not specify products but issued the warning ahead of the September launch of the iPhone 18, one month before his planned departure as CEO on September 1.
2. Memory Cost Surge
Contract DRAM prices doubled in Q1 2026 compared with the prior quarter, driven by soaring demand for high-bandwidth memory in AI data centers. This memory now makes up to a quarter of the cost of producing a smartphone, squeezing margins.
3. Impact on Upcoming Models
Price increases could push the cost of top iPhone models beyond £2,000, while analysts predict at least a £100 premium on the cheapest iPhone 18. Apple is also set to unveil its first foldable phone at the September event, which may carry similar upward pricing pressure.
4. Supplier Contracts and Sales Outlook
Long-term DRAM contracts previously shielded Apple from cost surges but are now expiring, exposing the company to market prices. Analysts at CCS Insight forecast a 15% drop in smartphone sales this year to decade-low levels, with further declines expected in 2027.
