Supply Chain Crunch
Apple and its manufacturing partners are under intense pressure to source sufficient mobile DRAM to complete production of the iPhone 18 Pro and its upcoming foldable device. According to semiconductor analyst Tim Culpan, approximately $1 billion in unpackaged processors are currently stalled in production due to a shortage of memory chips. This issue threatens to slow down the final manufacturing phases.
With just under six weeks until the rumored debut of the iPhone 18 Pro and the foldable model, which is often referred to as the "iPhone Ultra," assemblers are working urgently to ensure that DRAM shipments arrive quickly. Apple has partnered with suppliers such as Micron, SK Hynix, and Samsung to meet its memory requirements. While the company and its partners remain optimistic they can fulfill initial demand, concerns persist that online customers might face extended wait times. As in-store inventory runs out more rapidly, the issue is expected to worsen. Apple's new A20 Pro chips are built on TSMC's 2nm process and use Wafer-Level Multi-Chip Module packaging to integrate the processor and DRAM at the wafer level, meaning TSMC needs to have the DRAM on hand for assembly, and it can't be added at a later step.
TSMC, responsible for packaging Apple’s new A20 Pro chips, is facing a serious bottleneck due to DRAM shortages. Since the packaging process cannot proceed without the required memory components, many of these chips remain unfinished. Culpan estimates that TSMC is currently holding about $1 billion worth of Apple processors, waiting for the memory chips needed to complete their packaging. The chip backlog will delay main logic board assembly and final device assembly, which could impact production at Foxconn and other assemblers.
This shortage may impact the final assembly process carried out by Foxconn and BYD in China, who handle the main logic board and final device assembly for Apple. Even if Apple secures the necessary memory, any delays could cause production timelines to shrink, putting added strain on these key manufacturers.
The memory shortage is not isolated to Apple. It is part of a broader global shortage caused by increased investment in AI infrastructure. This trend is consuming large volumes of DRAM. During the earnings call on July 30, Apple CEO Tim Cook acknowledged the challenges. He stated that the company is encountering "significant constraints" in the supply chain. He also noted that there is little room for flexibility. To adjust, Apple has already increased prices. The company is shifting production focus, encouraging customers to consider MacBook Pro models over the more affordable MacBook Air. Apple is also expected to raise prices for the iPhone 18 Pro and iPhone 18 Pro Max, and analysts believe the devices could be up to $300 more expensive because Apple is paying more for RAM.
According to reports, Apple plans to manufacture around 200 million units across the iPhone 18, iPhone 18 Pro, and the new foldable model, the iPhone Ultra. The Ultra is expected to make up less than 10% of the total, with the remaining units split evenly between the standard and Pro models. The iPhone Ultra could be introduced in September and then launch later, in October or November. We've had ongoing rumors about manufacturing issues with the iPhone Ultra due to the complexity of the design, and supplies of the new foldable could be the most limited of the three iPhone models. The iPhone Ultra is going to cost as much as $2,500, but the novel form factor and Apple's new Apple Upgrade pricing option could lead to more people being willing to shell out for the device. Apple is not planning to launch the standard iPhone 18 until early 2027.