Apple significantly increased its inventory in the September quarter as it sought to secure supplies of computer memory amid unprecedented price increases, a move that could provide some short-term cost protection but is expected to offer diminishing benefits as component prices continue to rise.
The company’s inventory increased to $14.54 billion in its fiscal fourth quarter, from $11.09 billion in the preceding quarter, representing a 31.1% increase. Compared with the same period in 2025, inventory rose 154.3% from $5.72 billion.
The buildup comes as Apple prepares for higher memory costs in the December quarter, with the company forecasting a gross margin of between 45% and 46%, below the 47.9% recorded in the September quarter.
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Chief Executive John Ternus attributed much of the expected margin pressure to rising memory prices, describing current market conditions as unprecedented.
“What we’re seeing with memory pricing right now is unprecedented,” Ternus told analysts during the company’s earnings call.
He said Apple had already experienced higher memory costs in the September quarter compared with the June period, although the impact was partly offset by inventory purchased at lower prices and savings on certain non-memory components.
The company expects memory costs to rise further in the December quarter. Price increases introduced earlier in the year on selected products, including Mac and iPad models at the end of June and iPhones in September, are expected to provide some protection against the additional expense.
However, Ternus indicated that the pressure would continue beyond the December quarter, saying Apple expects memory costs to keep increasing.
Apple’s inventory buildup is part of a broader effort to secure critical components before further price increases affect production costs.
Holding inventory purchased at lower prices allows manufacturers to delay the full impact of rising component costs. For Apple, this has helped offset some of the increase in memory prices, particularly as demand for advanced computing components intensifies across the technology industry.
That protection is temporary, however. As existing stocks are consumed and replaced with more expensive supplies, the benefit of earlier purchases is expected to decline.
“As we said before, we do believe we’ll see a decreasing benefit from the carry-in inventory on memory over time,” Ternus said.
He added that Apple was increasing its purchases of the component to improve supply availability.
The company’s manufacturing purchase obligations increased by $33 billion between June and September, according to Ternus. He said the figure would be disclosed in Apple’s annual filing scheduled for release the following day.
The increase provides an indication of the scale of Apple’s procurement commitments as it attempts to secure sufficient components for manufacturing. It also suggests that the company is committing more capital to future supply arrangements at a time when memory prices are rising.
Apple Chief Operating Officer Sabih Khan, who oversees the company’s supply chain and manufacturing operations, also joined the earnings call to address questions about memory availability and costs. He reiterated the increase in purchase obligations but did not rule out further price increases for Apple devices.
The possibility of additional price adjustments exposes the challenge facing Apple as it seeks to protect margins without weakening demand. Higher retail prices could help offset component inflation, but the company’s ability to pass on additional costs will depend on consumer demand, competition, and the pricing of rival products.
Supply limitations also affected Apple’s product performance in the September quarter, with the iPad business recording one of the weakest results among its major hardware categories.
Revenue from iPad sales was $6.2 billion, below analysts’ expectations of $6.7 billion. The figure represented a 10% decline from the same quarter a year earlier.
The weakness contrasted with stronger performances from Apple’s iPhone and Mac businesses, whose sales exceeded analyst estimates. The iPad was one of the few product segments that failed to record growth during the quarter.
Apple attributed the weaker iPad performance partly to supply constraints, indicating that the company was unable to meet all available demand.
The issue is significant because component shortages can affect both the volume of products a company sells and the timing of revenue recognition. Even when customer demand remains intact, manufacturers may struggle to convert that demand into sales if they cannot secure sufficient supplies.
For Apple, the combination of higher memory costs and supply constraints presents two related challenges. The company needs to secure enough components to maintain production while managing the effect of more expensive supplies on profitability.
Its inventory expansion provides some protection against immediate shortages and price increases, but the growing procurement commitments also point to higher costs ahead.
The December-quarter margin forecast suggests that Apple expects to absorb at least part of the additional expense rather than fully offset it through pricing. With memory costs expected to continue rising beyond the holiday quarter, the pressure could extend into subsequent reporting periods.