Apple is facing significant challenges with rising component costs, particularly for memory chips, which may lead to a price increase for the upcoming iPhone 18 Pro. In a recent interview with the Wall Street Journal, CEO Tim Cook stated, "Unfortunately, a price increase is unavoidable. We have done our best to minimize the increase and protect customers, but the situation is unsustainable." He mentioned that the company is currently evaluating pricing adjustments and will announce them when the next generation of iPhones is launched.

The anticipated price hike is primarily due to a global shortage of DRAM and NAND flash memory chips. The surge in demand for AI data center capabilities has prompted major manufacturers like Samsung Electronics and Micron Technology to shift their production lines towards enterprise memory chips for AI servers, thereby constraining supply for consumer electronics.

According to market research firm TechInsights, the prices of DRAM and flash memory components are expected to quadruple this fall compared to the same period last year. Previously, Apple paid around $39 for 12 GB of RAM in the iPhone 17 Pro, but this cost could rise to $145 for the iPhone 18 Pro. Similarly, the price of a 256 GB flash memory chip is projected to increase from $13 to $51.

The estimated cost of components and production for the iPhone 17 Pro, excluding memory, is about $530. When factoring in RAM and internal storage, the total material cost for a standard iPhone 17 Pro is approximately $582. In contrast, the cost for the iPhone 18 Pro is expected to increase by 25%, reaching around $726.

Currently, the iPhone 17 Pro starts at $1,099, providing Apple with a gross margin of 47%. To maintain this margin with the new generation, Apple would need to price the iPhone 18 Pro at around $1,371. However, the company typically rounds its pricing, making $1,299 a more likely figure. This estimate does not include the costs associated with a new camera system, which analyst Ming-Chi Kuo predicts will be over 50% more expensive than its predecessor.

Considering these factors, the Wall Street Journal forecasts that Apple may have valid reasons to set the starting price of the iPhone 18 Pro at $1,399 or higher. The iPhone 18 Pro and 18 Pro Max are expected to be unveiled in September, alongside Apple's first foldable device, the iPhone Ultra, which is predicted to be the company's most expensive phone to date, exceeding $2,000.