Apple significantly increased its inventory in the fourth quarter of its fiscal year as the company prepared for rising memory chip prices and potential supply challenges, according to its earnings report released on Monday.
The company’s inventory rose to $14.54 billion in the fourth quarter, up 31.1 per cent from $11.09 billion in the previous quarter. Compared with the same quarter last year, inventory surged 154.3 per cent from $5.72 billion in the fourth quarter of 2025.
Apple expects its gross margin to fall to between 45 per cent and 46 per cent in the December quarter, largely due to increasing memory costs. The company reported a gross margin of 47.9 per cent for the September quarter.
Apple CEO John Ternus told analysts that the current rise in memory prices was unprecedented.
He explained that memory costs had already increased in the September quarter compared with June. However, the impact was partly offset by the company’s existing inventory and lower costs for certain components other than memory.
Ternus said Apple expected memory costs to rise further in the December quarter. The company expects to partly offset the increase through price adjustments introduced earlier this year for some products, including Mac and iPad devices at the end of June and iPhones in September.
He added that memory prices were expected to continue climbing beyond December.
According to Ternus, the financial benefit of using previously purchased memory inventory would gradually decline over time. To secure supplies, Apple is increasing its purchases of the component.
He also revealed that the company’s manufacturing purchase obligations had increased by $33 billion between June and September as it worked to improve supply. The details are expected to appear in Apple’s annual filing.
Apple also brought Chief Operating Officer Sabih Khan, who oversees its supply chain and manufacturing operations, into the earnings call to address questions about memory costs.
Khan confirmed the increase in manufacturing purchase obligations but did not rule out further price increases for Apple products in the future.
Meanwhile, supply constraints also affected Apple’s iPad business during the quarter. The product category was among the few segments that failed to record growth, even as iPhone and Mac sales exceeded analysts’ expectations.
Apple reported iPad revenue of $6.2 billion, falling short of analysts’ forecast of $6.7 billion. Revenue from the product category also declined 10 per cent compared with the same period a year earlier.
The latest figures highlight the pressure rising memory prices and supply limitations are placing on Apple’s costs, profit margins and product sales.
