Memory Price Hikes officially here with Apple increases. ARD #105
Today’s theme: The memory price hikes feel real now— especially from Apple across the board, with Micron the biggest US beneficiary, and real implications for inflation and the economy. These rainstorms have been months in the making. But it feels really wet when iPads and Macbooks go up in price. The semiconductor stocks signaled it months ago, the memory crunch from the trillion-dollar AI-data-center binge drives it, and it’s here to stay for a while. Three events I’d like to dig into for the AI Tech Wave — each with my Take first, then my Overall Take.
(1) Micron’s Quarter Underlines the Things to Come
MP TAKE: As the adage goes, someone’s loss is someone’s gain. Micron — the leading US memory company, based not in Silicon Valley but in Idaho, where potato chips also have their origins— just won its decades-long tech lottery ticket, with revenue quadrupling and the stock jumping ~15-20% after earnings, now sitting closer to 1.5 trillion dollar market cap mark than its earlier earned trillion plus dollar cap. Alongside its South Korean peers SK Hynix and Samsung.
The most striking thing for someone who’s tracked Micron since the 1980s: it’s posting ~85% margins. Blank out the name and I’d have said this is a software company much further up the tech stack — but no, it’s a traditionally cyclical semiconductor company that has sat at the bottom of the stack through every tech wave (PC, internet, mobile), now riding the AI wave with software-like economics. While this can last longer than the normal quarterly cyclical turns in semis, this too shall pass — the world can make enough chips given time and resources. Not as fast as potato chips, but the world will make more. To widen the lens: the near-term relief valve may run through China — we may have to go there for a while to get the extra supply, even as the politics around that stay unsettled.
Sources, in narrative order: CNBC — Micron stock jumps 15% as soaring prices from the memory crunch lead to a quadrupling of revenue. WSJ — Micron’s blockbuster quarter quiets the AI doubters. For longtime readers, in narrative order: ‘US hamstrung on memory-chip supply via China’ in AI-RTZ #1128; and ‘Semiconductors Remain a Key AI Gating Factor’ in ARD #104.
(2) Apple Raises Prices 15-25%-Plus
MP TAKE: Well-signaled by outgoing CEO Tim Cook — though we’d expected the increases closer to September when new CEO John Ternus takes over. Apple just bit the bullet, raising prices 15-25%-plus across the line — MacBooks, iPads, Apple TVs, Vision Pros, displays — to counter the memory shortage, and the shares slipped on the news. Even the value MacBook Neo went from $599 to $699 (with an education discount back to $599). For now, they seem to have held off price increases on base iPhones and some other items.
The key point: on a relative basis, Apple continues to have the most resilient supply chain at scale. Relative to peers that lack its wide, deep, global hardware/software supply chain, Apple is better off — the best seat in the pouring rain. But it’s still something to watch, and the market doesn’t quite like it. To widen the lens: it’s a relative win, not an absolute one — there’s little near-term relief for anyone, and even Apple is passing costs through rather than absorbing them. And because it’s Apple raising the iPad and MacBook (not a Windows machine, an Android phone, or an Xbox), regulators and economists actually notice — which leads straight into the third event.
Sources, in narrative order: Bloomberg — Apple hikes Mac, iPad prices on memory shortage; shares fall. The Verge — Apple raises prices (the list). For longtime readers, in narrative order: ‘Apple’s 100-Year Flood’ in ARD #100; and ‘Apple’s vaunted supply chain’ in AI-RTZ #1010.
(3) Implications for the Economy
MP TAKE: Economists are now asking what all this means for inflation. Typically electronics and gadgets aren’t viewed as a core component of the CPI — which leans on energy, food and the like — but this is how the modern economy actually runs, so it gets noticed. The WSJ frames the data-center boom as sparking a ‘third wave’ of inflation.
In the near term, we’re pulling forward a lot of the price hikes that were coming because of the data-center rush. The good news: the data centers will hopefully get built with the power they need. The bad news: consumers either make do with existing devices or pay up for the latest — which slows adoption. So the gap between the investment in data-center infrastructure and the use of that infrastructure with state-of-the-art gadgets keeps widening. To widen the lens: near-term you see the rising prices, but not the normally deflationary impact of technology — which historically takes years, not months or quarters, and may be extended even further this cycle given how RAM-hungry AI is (you now need a 12GB-RAM iPhone to run the top Siri AI features). Expect these debates to continue, and higher market volatility before it settles back to the mean.
Sources, in narrative order: WSJ — The data-center boom is sparking a third wave of inflation. For longtime readers: ‘The $1-to-9-trillion AI data-center compute builds ahead’ (2024) in AI-RTZ #529.
MP OVERALL TAKE
Today’s three events highlight the core issue of chip supply constraints I’ve flagged in these pages for over two years now. It seems like a flood when it starts to pour, and no easy answers abound — though there are some potential points of relief, they’re geopolitically difficult (Apple and others have lobbied to access more RAM from up-and-coming Chinese suppliers, while incumbents like Micron have lobbied to keep that door closed).
As Apple CEO Tim Cook said a few days ago, “it’s a 100 year flood”. He’s seen it for the first time in his four decades in the business.
For now, the advantage cedes to the ‘mainframe’ side of the AI race — the AI data centers — over the local side. The much-hoped-for rise of local-inference AI computing will occur at a slower pace than it would have in a ‘normal’ Moore’s Law world of ever-declining technology and computing prices. That’s postponed for a couple of years at least, if not until the end of the decade — and it matters for the so-called AI space race with China, where they’re very proficient at making do with less.
Gadget AI — Short-Term ‘Sales’ on Computer Gear in the Teeth of the Price Increases
MP Take: A genuinely unusual state of affairs in computers and gadgets, across decades of tech waves: even as list prices rise, there’s a short-term window of Prime Day discounts still live in existing retail channels — including on MacBooks, just as Apple lifts MSRPs. There’s a lot of new and used inventory in the channel that takes days, weeks, even months to clear, so there’s a real opportunity to snipe deals if you’re in the market now — and overnight, some discounts jumped by hundreds of dollars relative to the new list prices. To widen the lens: it’s a fleeting arbitrage between old channel inventory and new higher list prices — and the eBays of the world will be short-term beneficiaries too.
Sources, in narrative order: The Verge — Get MacBooks at a Prime Day discount. For longtime readers: ‘Apple’s MacBook Neo’ and the value line of computing in AI-RTZ #1017.
Questions
Q1 — What are MP’s top Apple favorites despite the price increases?
The MacBook Neo — even at the $699 price, a very compelling offering for young and old; it does most of what you need and will run Siri AI when it arrives this fall. If you want more horsepower, the regular MacBook remains a great machine. I’d also highlight the base-level iPhone 17 Pro and this year’s Apple Watch 17 (not the Ultra) — Apple put some of its core killer features into the value tier this year, relative to its pricier models. And the AirPods Pro, of course.
Q2 — What happens to AI features on devices because of the price hikes?
They get postponed and delayed. AI devices — smart glasses, home speakers, anything you can imagine — are going up $50, $100, $150, so adoption goes down, especially when mainstream users are already skeptical of AI (job-loss and existential-risk fears). The industry’s answer is ‘more for less’ — more AI on-device and in the cloud with RAM as low as 8 to 12GB, plus better economies of scale on local storage. It harkens back to the early PC days and the 640K RAM ceiling of the 1980s — Bill Gates once talked about that as a limit that couldn’t be beaten easily. On the enterprise side, by contrast, the adoption curve stays very strong — developers are finding huge benefit in AI coding tools, which is why Anthropic and OpenAI are racing to tens of billions in revenue ahead of their mega-AI IPOs. But on local devices — including OpenAI’s upcoming Jony Ive portfolio — the price hikes will slow the rollout.
Full Source Reading —
For the broader context, see the canonical sources for ARD 105 — in today’s narrative order:
Event 1 — Micron’s Quarter
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CNBC — Micron stock jumps 15% as soaring prices from the memory crunch lead to a quadrupling of revenue
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AI-RTZ #1128 — US hamstrung on memory-chip supply via China
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ARD #104 — Semiconductors Remain a Key AI Gating Factor
Event 2 — Apple Raises Prices 15-25%+
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Bloomberg — Apple hikes Mac, iPad prices on memory shortage; shares fall
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The Verge — Apple raises prices (the list)
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ARD #100 — Apple’s 100-Year Flood
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AI-RTZ #1010 — Apple’s vaunted supply chain
Event 3 — Implications for the Economy
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WSJ — The data-center boom is sparking a third wave of inflation
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AI-RTZ #529 — The $1-to-9-trillion AI data-center compute builds ahead (2024)
Gadget AI — Prime Day Computer ‘Sales’
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The Verge — Get MacBooks at a Prime Day discount
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AI-RTZ #1017 — Apple’s MacBook Neo and the value line of computing
Shorts Clips from today
Clip 1 — AI Price Hikes Delay Adoption
The memory-driven price hikes ripple straight into AI devices — smart glasses, home speakers, anything you can imagine going up $50-150. At a time when mainstream users are already skeptical of AI, that means slower consumer adoption.
MP Take: The deflationary tailwind of tech normally pulls people in; remove it and the adoption curve flattens, especially on the consumer side. Enterprise stays strong on AI coding tools — but consumer AI devices, including OpenAI’s upcoming Jony Ive portfolio, will feel the price drag.
Clip 2 — Apple’s Resilient Supply Chain
Apple raised Mac and iPad prices 15-25%+ to counter the memory shortage, well-signaled by outgoing CEO Tim Cook. The value MacBook Neo went from $599 to $699 (with an education discount back to $599).
MP Take: On a relative basis, Apple still has the most resilient supply chain at scale — the best seat in the pouring rain versus peers that lack its wide, deep, global hardware/software supply chain. It’s a relative win, not an absolute one; even Apple is passing costs through rather than absorbing them.
Clip 3 — Price Hikes & Inflation Implications
When Apple’s iPhone and MacBook prices rise, regulators and economists notice — even if a Windows laptop or an Xbox quietly going up doesn’t register. The WSJ frames the data-center boom as sparking a ‘third wave’ of inflation.
MP Take: We’re pulling forward a lot of the price hikes that were coming from the data-center rush. The gap between the infrastructure investment and the consumer benefit is widening — so near-term you see rising prices without the normal deflationary payoff of tech, which historically takes years, not quarters.
About AI Ramblings Daily (ARD), and AI-RTZ
Both are daily. Both are free. Both are about AI. But they’re different mediums carrying different messages.
AI-RTZ is the morning text — a deeper written take on one idea, published by at least 5 AM EST. Today: post #1128.
AI Ramblings Daily is the afternoon video + podcast — my ad hoc takes and perspective on the day’s AI issues & news flow, around 20 minutes, with short 1-2 minute clips for quick topic views. Today: episode #105.
Subscribe to either or both on michaelparekh.substack.com. They run as separate Sections you can opt into or out of.
Links used in today’s show (already embedded inline above; listed here for reference)
Take 1 — Micron’s Quarter:
Take 2 — Apple Raises Prices 15-25%+:
Take 3 — Implications for the Economy:
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WSJ — The data-center boom is sparking a third wave of inflation
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AI-RTZ #529 — The $1-to-9-trillion AI data-center compute builds ahead (2024)
Gadget AI — Prime Day Computer ‘Sales’:
Q1 + Q2 — MP’s top Apple picks + AI features under the price hikes:
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(no external sources — MP’s own analyst view)
Companion text:
AI Ramblings Daily on AI-RTZ is here to think through AI and reset. Together.
Today’s AI-RTZ #1128 — US hamstrung on memory-chip supply via China — The US is hamstrung on memory-chip supply as Apple and others lobby to access up-and-coming Chinese suppliers, while incumbents lobby to keep that door closed — a geopolitically fraught relief valve for the price crunch. Recommended as today’s reading post.
Tomorrow — ARD 106 on AI-RTZ 1129.
Thanks for joining us today, AI Curious Folk. Stay tuned.
(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here.)
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