Apple reported stronger-than-expected first-quarter earnings and forecast revenue growth of up to 16% for the current quarter, but said iPhone sales are being constrained by limited chip supply (29/01).

The company said demand remains strong, but production cannot fully meet customer needs.

Apple said sales could be higher if it were able to secure enough chips to support iPhone demand during the March quarter.

Revenue Outlook Reflects Supply Constraints

Apple expects total company revenue to grow between 13% and 16% year over year in the March quarter. The forecast already includes the impact of constrained iPhone supply.

“We expect our March quarter total company revenue to grow by 13% to 16% year over year, which comprehends our best estimates of constrained iPhone supply during the quarter,” finance chief Kevan Parekh told analysts.

Advanced Chip Manufacturing Limits Production

During the earnings call, CEO Tim Cook said the main constraint is access to advanced-node manufacturing used for Apple’s A-series and M-series system-on-chip processors. These chips are produced on leading-edge technology.

“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.

Apple said it is seeking manufacturing capacity on Taiwan Semiconductor Manufacturing Co.’s 3-nanometer node.

Memory Prices Rising Amid AI-Driven Demand

Analysts also asked about rising memory prices, which have increased due to demand for chips used in artificial intelligence data centers. Cook acknowledged that memory costs are rising across the industry.

“As always, we’ll look at a range of options to deal with that,” Cook said, without detailing how Apple is responding to the shortage.

Cook said memory prices had a minimal impact on the December quarter but are expected to have a bigger effect in the March quarter.

Margins and U.S. Chip Sourcing

Apple expects gross margins between 48% and 49% in the March quarter, which would be higher at the midpoint than in the December quarter. Cook said rising memory prices had a limited impact in the prior quarter.

Cook also said Apple sourced 20 billion chips from the U.S. in 2025, exceeding its previous target of 19 billion.

The figure follows Apple’s plan to invest more than $600 billion in the U.S. over five years, including spending on companies building chips domestically.

PHOTO: STEFAN VAZHAROV/BEST

This article was created with AI assistance.

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