Apple says price increases unavoidable as AI drives chip costs higher

Apple plans to raise prices as soaring memory chip costs driven by the artificial intelligence (AI) boom become increasingly difficult to absorb, Chief Executive Tim Cook told the Wall Street Journal.

"Unfortunately, price increases are unavoidable," Cook said in remarks published on Wednesday.

The technology industry has faced rising memory chip costs for months as the rapid construction of AI data centres strains available capacity and pushes prices higher.

Cook did not say when price increases would take effect, how large they would be, or which products would be affected.

Apple's next major product launch is expected in September with a new iPhone line up. In Germany, Apple's latest standard model, the iPhone 17, starts at €949 ($1,100), while the higher-end iPhone 17 Pro is priced from €1,299.

Apple has largely kept consumer prices stable in recent years, helped by long-term supply agreements.

Cook said the company was doing its best to absorb what he described as "huge" cost increases rather than pass them on to customers, but added that this was no longer sustainable. Apple had previously warned that rising memory costs could require countermeasures.

Several PC makers and video game console manufacturers have already raised prices, while other major electronics companies have also warned that memory chip costs have risen to levels that may require higher prices for consumers.

Although chipmakers are expanding capacity, the process is lengthy and new production may be prioritized for memory products used in AI data centres.

China has meanwhile built up large state-backed memory chip manufacturers, but US companies face significant restrictions on working with them. Asked whether such rules should be eased, Cook said all options should be considered.

"I think we should look at all supply," he said.