Apple Faces Foldable iPhone Supply Constraints, Rising Memory Costs

What happened

On its fiscal fourth-quarter 2026 earnings call on Nov. 3, Apple said memory prices were moving at "unprecedented levels" and expected procurement costs to continue rising beyond the December quarter. Apple forecast a gross margin of 45% to 46% for the October-December quarter, below the market consensus of 46.3%. CFO Kevan Parekh said gross margin for the July-September quarter, excluding tariff refunds, declined approximately 1 percentage point from the previous quarter, primarily because of higher memory costs, adding that the actual cost increase was greater but partially offset by existing inventory and lower non-memory component costs. COO Sabih Khan said manufacturing-related purchase commitments increased by $33 billion between the June and September quarters (covering all manufacturing-related commitments, not memory alone), but did not disclose whether Apple had signed LTAs with memory makers or how much supply it had secured. He expects memory supply shortages to constrain Mac and iPad shipments in the October-December quarter, and said July-September supply constraints for iPhones, Macs and iPads were primarily caused by limited capacity at advanced semiconductor processes. The foldable iPhone Duo, launched October 23, faces persistent supply shortages; after preorders opened October 16, orders surged and estimated delivery dates for some models slipped into January next year. Khan said production expansion was progressing smoothly but the device remains supply-constrained and it is difficult to predict when supply and demand will balance. The iPhone Duo also faced quality concerns over cracks in its internal display and other screen abnormalities; in a separate interview on the day of the earnings announcement, Ternus said returns due to display issues were "extremely small" and Apple was replacing affected devices, without disclosing the return rate or defect causes. Apple raised Mac and iPad prices in June and iPhone prices in September to counter higher costs, and said existing inventory and declining non-memory component costs would provide some relief in the October-December quarter but would gradually diminish. Apple forecast revenue growth of 7% to 10% year over year for the first quarter of fiscal 2027 (October-December), which would mark its highest quarterly revenue on record, while its services revenue growth forecast of 8% to 9% fell short of the market consensus of 10.7%. Shares fell as much as 4.4% in after-hours trading following the announcement. Apple reported fiscal Q4 2026 revenue of $114.5 billion, up 12% year over year and above expectations of $113.4 billion, with iPhone revenue up 17% to $57.6 billion, Mac revenue up 24% to $10.8 billion, and services revenue up 10% to $31.6 billion.

Impact and signal

Affected components and suppliers

Source and time

Source: The Elec · 11/3/2026 · View original source