With the rise of generative AI creating significant demand for hardware components, Apple and other manufacturers are confronting what outgoing CEO Tim Cook describes as “a century-scale flood [on] memory pricing,” which is greatly affecting the production costs of iPhones, MacBooks, and various other devices.

Apple characterized its latest earnings report as its “best June quarter ever,” with sales of iPhones and Macs exceeding expectations, with increases of 22% and 29%, respectively, compared to last year. Nonetheless, the company is preparing for worsening memory shortages, termed RAMageddon. Apple’s primary hurdle is obtaining the advanced memory nodes required for its Apple silicon chips that drive the A-Series and M-Series processors used in iPhones and Macs.

“We continue to anticipate high levels of demand. However, given the reduced flexibility in our supply chain, we foresee the effects of these supply limitations becoming significantly more pronounced,” Cook stated during Apple’s quarterly earnings call. “We are currently experiencing substantial constraints with limited flexibility within our supply chain to address this.”

Apple is evidently concerned enough about supply shortages that it disclosed $11.1 billion in inventory, almost twice the $5.7 billion reported last September. This represents a shift from Cook’s previously maintained supply chain strategy, which focused on minimizing the inventory Apple holds.

Due to these constraints, Apple was compelled to “reluctantly” increase the prices of Macs and iPads last month, Cook mentioned. Other companies that have elevated hardware prices include Meta, Samsung, Microsoft, and Sony.

“We’re essentially going to be scrambling on the supply side,” Cook stated.

For the next quarter, Apple anticipates revenue growth ranging from 9% to 11% year-over-year. However, in recent quarters, Apple has maintained an approximate 16% year-over-year growth. Naturally, this raises concerns among investors — Apple’s stock fell 6% in after-hours trading.

When Senior VP of Hardware Engineering John Ternus assumes the role of CEO in September, the company may encounter a challenging period, though Apple is not isolated in its supply issues.