Why is Apple raising prices to cover Big Tech's AI obsession?

Apple has raised prices across multiple products, with the 16-inch MacBook Pro increasing by $300, the 11-inch iPad Air jumping from $599 to $749, and the HomePod Mini adding a $30 bump to reach $129. CEO Tim Cook called the increases "unavoidable" and described the company's pricing as "unsustainable," placing the blame squarely on the AI industry.

The cause is a shift in memory production. According to Carnegie Mellon's Tim Derdenger, "the price of RAM has skyrocketed because the memory manufacturers have reallocated their production lines to produce new HBM memory for AI data centers and away from consumer DDR5." NYU Stern's Srikanth Jagabathula added that companies prioritize data center clients because "the same chip earns far more inside an AI server than inside a consumer device." OpenAI, Google, and Microsoft have spent unprecedented amounts outbidding Apple for RAM and storage, a dynamic Sam Altman has called a bubble. The Xbox has seen prices climb nearly 25 percent, and Nothing canceled an entire phone launch as a result.

Apple has posted record earnings for at least four consecutive quarters, and its hardware markups are estimated at 30 to 40 percent, with TechInsights and The Wall Street Journal suggesting the iPhone 17 Pro markup may reach 47 percent. Jagabathula warned that the shortage may extend into the next few years, making simply absorbing the cost unsustainable for Apple.