Apple boss Tim Cook says prices to rise due to memory chip costs

https://www.bbc.com/news/articles/c3wyxvqdx1zo

by ilreb • 1 month ago

142 170 1 month ago

pjmlp4• 1 month ago

Of course they were, not even Apple has infinite stock.

What they have are sweet margins and deals in place that helped them to take some time until the inevitable came to be.

In the other hand maybe all these prices drive folks to program like we used to, conscious of the hardware limitations, without extra slots to rescue from bad programming.

bredren• 1 month ago

Hasn't Apple's dev environment for iOS and its non-macos relatives always been about working with as little memory as possible?

It seems like Apple, of all companies has been about doing more with less memory.

That would seem to have helped in the % of BOM getting wrecked by the supply chain and discipline of developers in its ecosystem.

pjmlp4• 1 month ago

Not really, they just don't support pagination, which is another matter, plenty of GB on those devices for Cordova, React Native, Webviews in general.

mathisfun123• 1 month ago

Where do people get these goofy ideas about how Apple functions? Is there like a mythology section of the Wikipedia?

keybored2• 1 month ago

In the other hand maybe all these prices drive folks to program like we used to, conscious of the hardware limitations, without extra slots to rescue from bad programming.

I don’t understand why this comes up on all of these topics.

Dire need will compel a naked woman to learn to weave her own clothes, but there is no weaving machine for just making more efficient software. (American) Software developers are expensive, now I guess compute will either be expensive, more centralized, or have much more demand from competing interests (vibe coders who are implementing their own bespoke software or abandonware-for-one), and compute-for-code (GenAI) is a whole emergent engineering problem.

Then we hunker down and listen to or read a piece by Muratori, I guess, just practice some of those principles? But what seems to keep happening is that we get stuck by constraints that go beyond just writing more efficient code as a solo contributor on a solo project. That you can predict the efficiency of the code by the application domain suggests that there is a whole big system (of people and processes) above our heads that is not simple for any person or group of people to untangle.

pjmlp4• 1 month ago

Because the pendulum went too far writing garbage applications in Electron and friends.

Yes, Casey and friends are 100% spot on.

dist-epoch5• 1 month ago

There is another reason - if the cheap phones necessarily go up in price, but Apple eats the cost increase since they can afford it, then the cheap phones suddenly will cost about as much as an iPhone. That is a big ick.

A big selling point for iPhones is that they are much more expensive than the Other phones, so it is absolutely necessary for Apple to make sure it's phones keep a 50% price luxury bonus, or many will stop buying them.

TL;DR - ultra-expensive iPhones are a feature, not a bug, like ultra-expensive watches

noobermin• 1 month ago

Tbf, this current era of capitalism really is a lot where absolutely no one wants to enter the market and take advantage of a clear overpricing of memory for consumers but simply wants to charge the same amount as everyone else. So much for "efficient markets."

lysace• 1 month ago

Looks pretty darn efficient to me:

https://ourworldindata.org/grapher/historical-cost-of-comput...

arthurbrown• 1 month ago

That chart stops in 2023.

ThePhysicist2• 1 month ago

Everyone always wants to charge as much as they possibly can, and if SK Hynix would be the only manufacturer prices would be 10x of what they are today. Especially new incumbents will not ruin the market prices as they have the highest upfront cost and their calculation of entering the market is probably based on the high prices that can be achieved. In the long run, more competition is still good as everyone ramps up production to profit more from the high prices and at some point supply will outpace demand and prices will fall (assuming no cartel / price fixing is involved).

tornikeo• 1 month ago

Nobody's stopping you from taking advantage of that shortage :) Just don't forget to turn your garage EUV machine on and off if it starts glitching.

adrian_b2• 1 month ago

US is stopping China to increase their DRAM and flash production as they would, by forbidding everybody to sell modern semiconductor manufacturing equipment and consumables to China.

China is increasing their production of DDR5 and SSDs, but much more slowly than it would have been possible in a free market.

The current prices for DRAM and SSDs would have never happened if USA had not started to sabotage the Chinese memory industry a few years ago, presumably because Micron wanted to eliminate their competition.

The US sanctions against memory producers have started exactly when Apple was considering the use of Chinese memories in their smartphones, so Apple had to cancel their plans.

The claims that the sanctions against the Chinese memory producers have anything to do with US "national security" or with military applications are just a big shameless lie.

Military applications are content with older memories, which China can produce in sufficient amounts. The SOTA DRAM modules and SSDs are more important for consumer products and the US "sanctions" have the only purpose of maintaining artificially high prices for the consumer products, which steals money from millions of people all over the world.

herodoturtle• 1 month ago

Could you please expand on this?

Aren’t prices sky rocketing precisely because of excess demand? And they’d collapse in turn if demand disappeared.

My understanding of economics is entry level so please forgive my ignorance. I’m just curious what you mean.

8ytecoder• 1 month ago

The usual argument is that as prices rise, demand will shrink and supply will rise to take advantage of the increased price.

anon3738392• 1 month ago

Aren’t prices sky rocketing precisely because of excess demand?

Not exactly. The RAM crisis was sparked by OpenAI contracting with multiple vendors to take vast quantities of raw, unfinished wafers off the market. Wafers which OpenAI had no use for -- they just wanted to starve competitors.

This is different from an "AI is so popular that manufacturers can't keep up with demand" story.

OpenAI and Anthropic are the sleaziest companies that have come out of Silicon Valley in a long time, and that's really saying something.

rapsey• 1 month ago

As if simply entering the market is trivial.

neonstatic• 1 month ago

dumping on it certainly is

prmoustache2• 1 month ago

You don't want to build a huge factory if you believe the market might deflate suddently.

A lot of industries got bitten by greed and the sudden deflation of demand and huge unsold inventory post COVID. The reality is the market was overly and abnormaly inflated and consumers who bought the stuff during COVID period were equipped for the next ~10 years in stuff like sporting goods and had no reason to buy new items in the subsequent years.

I do believe we will always need more RAM even if there is a market correction or AI bubble burst whatever you want to call it. It will not destroy AI completely, just cleanup the market. But how much will we need? I guess the chip makers makes their own guesses but don't want to make their company in peril either.

cryo32• 1 month ago

And that’s exactly what it’s going to do because the dependency chain on actually using this RAM is unlikely to succeed.

frollogaston12• 1 month ago

But they are building huge datacenters for AI. The investment appetite is there. So there must be some worse bottleneck when it comes to memory itself.

ErneX• 1 month ago

Exactly, and this isn’t the 1st time this happens. Some companies disappeared years ago due to overcapacity when prices went down.

johnvanommen4• 1 month ago

A lot of industries got bitten by greed and the sudden deflation of demand and huge unsold inventory post COVID.

I’m betting that the world is about to hit a wall of inflation.

https://i.ibb.co/s9Mm8w2r/IMG-0743.jpg

This is a graph I made.

It shows:

* the inflation rate from 1971 until 1991

* the inflation rate from the start of COVID 19 until today.

Does anyone notice anything interesting about the graph?

dist-epoch5• 1 month ago

This is Capitalism working exactly as intended - resources (RAM) are allocated to those which can use them most productively (AI data-centers)

And the AI data-centers are using the RAM so productively, that they are willing to buy them at any price whatsoever.

adrian_b2• 1 month ago

No, this is not Capitalism working as intended, because there is an entity, the US government, whose purpose is to sabotage those who are willing to increase production to satisfy the extra demand and decrease the prices.

So the market is not free at all, the lack of competition is maintained by force.

Already for many years, the prices of various products like smartphones, SSDs and memory modules have been kept artificially high by the anticompetitive measures called "US sanctions".

jbs789• 1 month ago

Umm… a simpler explanation is that supply takes a lot longer to ramp up than demand.

See analogues in oil booms (then busts).

rjzzleep• 1 month ago

I'm not sure how much of it is just an unintentional side-effect of greed from promises of international capital based in NY, and Dubai, and how much was intentional malicious behavior to destroy home compute to force people to pay for openai subscriptions, but the role of a functioning government typically is to keep corporations from doing exactly this.

Regardless of which one it is, I absolutely despise the cartel that is running the US government right now, that created this situation for their crony big tech buddies.

bxk76• 1 month ago

Well no one gets a free pass for too long. If prices rise consumers hold politicians responsible. Its just that the feedback loop plays out at different rates for the corps, cronies, politicians.

Frieren• 1 month ago

malicious behavior to destroy home compute

It is part of the global trend to "rent everything, own nothing".

High inequality means that everybody wants to sell to the hyper-rich individuals and corporations. And selling products and services to the working class is a losing money endebour.

So, money accumulation means asset accumulation, that means more renting, that means more money...

frollogaston12• 1 month ago

Home compute doesn't matter to them, their advantage is the model. If they're trying to squeeze anyone out, it's the other AI companies.

nullorempty• 1 month ago

But the governments had been this way for decades now. It's just that things are accelerating and people notice it more.

jannes• 1 month ago

Props to them for making it this far into the crisis without raising prices.

It had even led to some anomalies where Apple machines were a better price than similar Windows machines.

dataflow• 1 month ago

Props to them for making it this far into the crisis without raising prices.

Yeah, it's a laudable miracle that this $4T+ company could survive this long without raising prices on such razor-thin margins.

looofooo02• 1 month ago

The iPhone is also a vehicle to hook people into the Apple ecosystem, where Services like the App Store bring in 40% of all gross profit with margins of 75%.

flaunf221• 1 month ago

without raising prices.

Because they were already selling memory at crisis prices when it was dirt cheap.

And now they want those crazy margins again.

frollogaston12• 1 month ago

It's nothing special, high-margin product prices are less sensitive to the costs.

lostlogin2• 1 month ago

Is that it, or did Apple negotiate long term contracts with suppliers?

Tim Apple has never been one to shy away from squeezing out another dollar.

alt2273• 1 month ago

Their products were so overpriced to begin with they had plenty of buffer to swallow supply price hikes like this for some time.

ThePhysicist2• 1 month ago

Apple RAM prices always had quite a bit of margin though, I think they charged around 4x the going market rate per GB (that said you can't fully compare their RAM to a loose DIMM stick). I was planning to pick up a new Mac Studio this autumn, now I'll have to see if I can afford it, though I have been spending 1,000 USD on LLM subscriptions in some months so I guess even a 10,000 USD Studio Mac amortizes quite fast if it allows me to run coding models locally.

Xiol• 1 month ago

That's an expensive looking 'if'.

dirasieb• 1 month ago

there's no local AI model that comes even close to the ones you get access to by paying 1000 USD per month

digitaltrees• 1 month ago

The large models are really close in my experience. Just slower.

esperent3• 1 month ago

you can't fully compare their RAM to a loose DIMM stick

Why?

kg• 1 month ago

IIRC modern Apple devices integrate the memory into the whole SoC instead of making it separate on the board and replaceable. It's definitely not swappable like a DIMM or CAMM module would be. Can't find a photo of a decapped M4 chip to prove it, though...

lynguist2• 1 month ago

https://macmagazine.com.br/wp-content/uploads/2020/11/18-tea...

This image shows it best.

The memory is on the same package as the SoC. (It's not on the motherboard.)

yreg• 1 month ago

The funny thing is that currently Apple's RAM upgrades are cheaper than the loose dimm sticks.

I've just got a new MBP this month, because I expect the prices to rise significantly with the new macbooks in the fall.

theturtletalks3• 1 month ago

I would wait until the next Mac Studio. Rumors are it will have 768GB max memory and with the M6 Max chip, even faster prefill. I feel like it’s the endgame.

kilroy1232• 1 month ago

Yeah for like $25,000+

jl62• 1 month ago

There’s probably a big marketing opportunity for anyone who can make more memory-efficient alternatives to some of the bloated apps that have normalized the need for >16GB RAM in a desktop computer.

Alongside dark mode, apps should have a “slim mode” that turns off some of the more wasteful features in order to run on older/smaller hardware.

Hamuko• 1 month ago

I doubt there's any kind of a set of features that can be turned off to reduce the memory footprint by any significant amount when most of the memory bloat comes from the application running its own instance of Google Chrome.

jl62• 1 month ago

Yeah, so don’t do that.

throawayonthe• 1 month ago

this used to be a thing right? social media apps used to have a 'lite' edition, facebook, tiktok, something else

and when android go was thing there were (are?) lighter apps targeting that like google maps go even

krieger_8572• 1 month ago

they still exists, although google is phasing out some of the Go line of apps

steve19772• 1 month ago

It's called native applications and has been around since before the days of web app wrappers. Just stop using Electron and you're halfway there already.

alt2273• 1 month ago

Still dont see the point of using electron for mobile apps. Just make a webapp and be done with it without having to jump through the app store hoops.

frollogaston12• 1 month ago

I feel like the market of apps and websites has usually been irrational about bloat because developers tend to have beefy machines. It required a beefy machine just to use Twitter without lag, and now X is the same. In the 2000s it was excessive Flash instead, or Java for apps.

Some sites like Google were able to measure the user-engagement cost of slowness and chose to optimize, but they're exceptional. I doubt most businesses know the cost.

mrweasel2• 1 month ago

Same for phone. I don't think anyone tests their websites on older devices anymore. Many sites have become useless, because it assumes that you have a massive screen, a modern GPU and plenty of memory. There's no point in having a video as a background, or load an excessive amount of Javascript, just to show me a news feed.

No one cares anymore, and I doubt that any hardware supply bottlenecks will improve that. It's not something that anyone care to measure.

cosmic_cheese• 1 month ago

I don’t think it’d be the worst idea to require devs to regularly test against something like a late era Core 2 Duo or i5-2500 machine with 4-8GB of RAM on the equivalent of a 3G connection. A lot of improvement could be netted from that alone.

cm21872• 1 month ago

There was a very interesting podcast that went into all the details of the AI supply chain shortage [1]

The key takeaway for smartphones isn't so much that iphones will cost $150-200 more, which apple customers have shown they can stomach. But that cheap $200 chinese smartphones will need have to hike prices by about the same amount, which will decimate that market.

[1] https://www.youtube.com/watch?v=mDG_Hx3BSUE

brailsafe6• 1 month ago

But that cheap $200 chinese smartphones will need have to hike prices by about the same amount, which will decimate that market.

Hmm. Even if iPhone users can theoretically stomach the increase, they have many other options available, whereas if the cheap $200 phones are the bottom of the market, there's no other real options.

I'm in the ~$450 USD Pixel range atm, and never buy the current flagship or anything. If that increases by $200, I'll look to the used market for the same phone. I really don't care that much about it, and it mostly acts as a fancy 5g modem for tethering. Plenty of younger people are already reverting to more primitive phones or physical media, and I wonder if it's just older addicted richer millenials that'll keep buying at even more than the already idiotic prices.

teiferer2• 1 month ago

Plenty of younger people are already reverting to more primitive phones

That's an effect that has always been claimed (younger generations rejecting new tech and going offline/low-tech/anti-...) but it's never been more than a minor very temporary fad. In the mid to long term, younger people are always at the forefront of tech adoption and it would be very surprising if it was different this time.

high_na_euv• 1 month ago

Plenty of younger people are already reverting to more primitive phones or physical media

Id love to know how many of em

yieldcrv• 1 month ago

If the smartphone is not economically viable, it will go away

Apple’s margin targets aside, the prices are rational

Trendy teens and 20 something’s still have iPhones, many just also have point and shoot cameras. This is more of a desire to be present in some contexts alongside aesthetics (of the photos and the gear), than a rejection of having 2 teraflops in their pocket.

It’s important to understand the why

frollogaston12• 1 month ago

I'd expect the iPhone price hikes to be less even in absolute $ than with the cheap phones. iPhones already had relatively large margins (as a %) for the newly increased costs to partially eat into.

Maakuth• 1 month ago

Why would you expect Apple to give up their margin? The DRAM price hikes affect every smartphone vendor, even Samsung through opportunity cost. That means the competition will also need to hike their prices. And the competition has lower margin, so they have less choice here.

AnthonyMouse4• 1 month ago

Or they'll start making cheap phones with <=2GB of RAM again and people will have to write software that uses memory efficiently (the horror).

dist-epoch5• 1 month ago

As the HN saying goes, people who can't afford an iPhone or a MacBook will not be your paying customers anyway, so don't worry about them.

a-french-anon• 1 month ago

You underestimate how poorly optimized Android (both the OS and ecosystem) is.

Fire-Dragon-DoL• 1 month ago

Glad me and my wife both bought a pixel 1 year ago, see you in 6 years! Lol

type0• 1 month ago

nd people will have to write software that uses memory efficiently (the horror).

Not possible since we all "need" AI in our phones

kilroy1232• 1 month ago

This is low-key a dream of mine. That we _start_ hyper-optimizing code to use less RAM and resources overall.

stein1946• 1 month ago

How much cheaper will a phone with 2gb vs one with 4gb? What changes in the supply chain?

rurp• 1 month ago

I would personally love it if efficiency actually became a priority again, but I don't see it happening. Instead we'll get an even more K shaped economy where people with enough money absorb the extra cost without much care, but everyone else will be materially worse off with a slower more limited phone.

Apple has a long history of not caring about budget-concious consumers. I doubt the wealthy decision makers at Apple and other companies are suddenly going to start caring about them now.

lynndotpy2• 1 month ago

Moore's lesser known cousin predicted this as Leslie's Law. Accounting for cost, Moore's law has practically jumped backwards in time over 15 years in the past six months.

kjshsh123• 1 month ago

The Alchian–Allen effect was described in 1964 by Armen Alchian and William R Allen in the book University Economics (now called Exchange and Production[1]). It states that when the prices of two substitute goods, such as high and low grades of the same product, are both increased by a fixed per-unit amount such as a transportation cost or a lump-sum tax, consumption will shift toward the higher-grade product. This is because the added per-unit amount decreases the relative price of the higher-grade product.

https://en.wikipedia.org/wiki/Alchian%E2%80%93Allen_effect?w...

mindslight2• 1 month ago

Apple sure is lucky that the supply chains for those low end Chinese phones are in a country that is notoriously bad at building new manufacturing capacity and prioritizing their own industry </s>

halJordan• 1 month ago

This is already the case in several African countries (cheap phones are no longer cheap, and sales drop precipitously)

jauntywundrkind• 1 month ago

We'll see what happens but I wouldn't be shocked or offended if China obliges the state-sponsored memory makers to support other local industry, beyond AI. The consumer electronics world shutting down would be immensely bad, for China, and for many: someone steering us all away from this path seems highly advisable for everyone.

Toms Hardware just put out an article talking about this, although they focused more on ssd and memory stick makers. The principle ought apply quite broadly though. https://www.tomshardware.com/pc-components/ssds/chinese-make...

ksec• 1 month ago

My bet is that all iPhone across the range will increase the price by $100.

iPhone Ultra $1699

iPhone Pro Max $1199 iPhone Pro $1099

iPhone Air 2 $999

iPhone 18 (2027) $899

iPhone 17 $799 ( Same Price )

iPhone 17e $599 ( Same Price )

And there won't be an 18e. Or May be an 18e at $699.

chvid2• 1 month ago

Enough of this.

It is time to activate the Chinese.

Seriously let ASML sell to CXMT etc.

dist-epoch5• 1 month ago

CXMT will sell their RAM.... to the AI labs

chvid2• 1 month ago

They will sell and keep selling until the price is too low to justify production. And then some more to gain market share.

djsjajah• 1 month ago

Except, that won’t help. By the time a new fab is up and running, we will probably have a massive surplus.

dzhiurgis3• 1 month ago

You assume demand for AI stays flat.

dist-epoch5• 1 month ago

Thanks, AI!

AnonC• 1 month ago

I read somewhere (don’t recall where) that Apple typically enters into contracts for RAM on a six-monthly basis and avoids longer term ones. Even in the current situation since last year, it has avoided getting into multi-year contracts like the AI companies have.

It’s certainly possible that the AI companies and their prospects may get a true reality check and then memory prices could cool down in a year or two. If that happens (I personally believe there is a good enough probability), then Apple will come out looking prescient for not getting locked into long term costly contracts.

It remains to be seen for how long the investors in the AI companies are willing to wait for total market capture and/or growing profits.

johnvanommen4• 1 month ago

I read somewhere (don’t recall where) that Apple typically enters into contracts for RAM on a six-monthly basis and avoids longer term ones. Even in the current situation since last year, it has avoided getting into multi-year contracts like the AI companies have.

* when interest rates are declining, that’s a feature not a defect

* when interest rates are rising, that’s a defect not a feature

Southwest Airlines built its business on these kinds of bets.

annagio_2• 1 month ago

Ohhh look, the companies that started the problem have to raise the price! sure yes, I will not buy any product, untill price goes down. And others should do, but each on their own. Price hikes on my food, home and now tech. I have a pocket and a voice, and I will stop buying any product.

ralfd• 1 month ago

Why did Apple start the problem?

annagio_2• 1 month ago

I said "Companies", meaning many companies not just Apple. They worked all together somehow to achieve the shortage and the raise the price.

unsupp0rted• 1 month ago

You can offset this cost by investing in memory stocks.

Apple product got $200 more expensive? Well you made $200 speculating on $DRAM.

Lost $200 speculating on $DRAM? Well at least your Apple product got less expensive.

fortyseven• 1 month ago

Or, considering you're already considerable markup, you could just make a little less money on each one... HAHAHA I'm just fucking with you Apple.

ChrisArchitect• 1 month ago

[dupe] https://news.ycombinator.com/item?id=48576901

sukuva• 1 month ago

perfect time to make smaller phones, simpler UIs, smaller apps, smaller screens. SMALLER EVERYTHING. Affordable, small phones is all most of us need.

lossolo• 1 month ago

Do we have any estimates on how much the price might increase? I was waiting for the MacBook Pro with the M6 Max and 128 GB of RAM, especially since there are rumors that it will come with a design refresh

Apple boss Tim Cook says prices to rise due to memory chip costs

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