At a time when smartphone makers have raised the issue of increasing price of memory chips, or RAM, and shortage driven by the massive demand for AI data centre components, Apple CEO Tim Cook has downplayed concerns, identifying a different ‘problem’ that limited the iPhone production. During Apple’s latest earnings call, Cook revealed that the primary factor is not the cost of memory, but a lack of “flexibility” in accessing the chips manufacturing required for its custom silicon.

How TSMC is the ‘problem’ for Apple’s limited iPhone production

When analysts questioned if rising RAM and NAND costs is hitting access to components, Cook shifted the focus to the company’s System-on-Chip (SoC) production. Apple relies on Taiwan Semiconductor Manufacturing Company (TSMC) to produce its A-series and M-series chips using the 3-nanometer node. Since TSMC is the sole provider of these chips, Apple is competing for limited “wafer” space to meet surging consumer demand.

“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 supply chain than normal, partly because of our increased demand,” Cook said. Cook said Apple is in the process of increasing its access to supply and didn’t want to forecast beyond March.

Apple CEO Tim Cook: We have different levers

Cook also revealed that rising RAM and storage chip prices had a “minimal impact” on Apple’s gross margin in the December quarter but noted that company anticipates “a bit more of an impact” in the current quarter.“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,” Cook told analysts.“There are different levers that we can push. Who knows how successful they’ll be, but there’s just a range of options,” he said.