Apple is beginning to feel the pinch from the oncoming constraints around memory products and TSMC’s choked advanced node supply lines, albeit in a managed fashion. This is the biggest takeaway from Apple’s just-concluded Q1 2026 earnings call.
Apple is feeling the pinch, and its guidance for the ongoing quarter reflects it
As most of our regular readers would be aware, the ongoing AI mania has cornered the global supply of memory products, as HBM use cases in AI GPUs and ASICs soar. And, even tech titans like Apple are getting affected.
We noted recently that Apple has secured access to sufficient NAND resources through the first quarter of 2026. Even so, KIOXIA is expected to raise its pricing for Apple once a long-term NAND supply agreement is signed. Moreover, Apple has only managed to secure access to DRAM resources for the first half of 2026.
Also, TF Securities analyst, Ming-Chi Kuo, noted earlier this week that Apple can substantially boost its market share in the ongoing chaos by absorbing memory price hikes and sacrificing some of its already hefty margins. Of course, this is easier said than done, especially as the analyst noted that Apple will now have to negotiate memory prices every quarter instead of biannually.
Meanwhile, TSMC’s advanced packaging lines are emerging as another bottleneck. As a refresher, Apple is expected to switch to WMCM packaging for its upcoming A20 chips, allowing for the integration of multiple individual dies – such as the CPU, GPU, and the Neural Engine – onto a single package, which provides an unprecedented level of flexibility due to the sheer number of die configurations that then become available.
Concurrently, Apple appears to be opting for TSMC’s SoIC-MH packaging technology for its upcoming M5 Pro and M5 Max chips. For the benefit of those who might not be aware, the SoIC is a 3D packaging solution that allows for the horizontal and vertical stacking of multiple chips onto a single SoC-like chip.
So, it was only natural that Apple’s executives were asked about these two twin constraints – memory and advanced node supply – at today’s earnings call. And, this is how Tim Cook responded:
“We exited the December quarter with a very lean channel inventory due to that staggering level of demand. Based on that, we’re in a supply chain mode to meet the very high levels of customer demand. We’re currently constrained, and at this point, it’s difficult to predict when supply and demand will balance. The constraints that we have are driven by the availability of the advanced nodes that our SoCs are produced on, and at this time, we’re seeing less flexibility in the supply chain than normal—partly because of our increased demand. To answer your question, memory had a minimal impact on the Q1 December quarter gross margin, but we do expect it to be a bit more of an impact to the Q2 gross margin. That was comprehended in the 48% to 49% outlook that Kevin gave earlier. Beyond Q2, we don’t obviously provide outlooks, but we do continue to see market pricing for memory increasing significantly. As always, we’ll look at a range of options to deal with that.”
Basically, Apple says that its gross margin will start taking a hit from these two constraints beginning this quarter. However, Cook was quick to note elsewhere that Apple has “arranged” the required memory and that the company can push different levers to secure the required components. This suggests that the disruption remains at a fairly manageable level for Apple right now.
Of course, the fact that Apple has entered the new year with depleted inventories does raise its overall vulnerability level by a smidge.
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