Apple memory costs cut gross margin by about a point from the June to the September quarter once tariff refunds are excluded, CFO Kevan Parekh said on the November 2 earnings call. The December guide of 45% to 46% is again primarily on higher memory costs.
The 47.9% margin in Apple’s Q4 2026 results looks stronger, but about a point of it came from tariff refunds, and Parekh said Apple has now received the vast majority of them. Apple also ran the whole quarter at the higher prices it set on June 25.
Apple memory costs took about a point off margin in the September quarter
Company gross margin was 47.9% and products gross margin was 37.2%. Both included a benefit of about one percentage point from tariff refunds, down from about two points in the June quarter’s 50.1% margin. Parekh said that without the refunds in either quarter, company and products gross margin would each have been down about one point from June to September, primarily because of higher memory costs.
Services gross margin was 76%, up 40 basis points from the June quarter. Operating expenses rose 21% to $19.2 billion as Apple kept investing in R&D. Gross margin still fell with the higher prices in place.
The December guide takes gross margin one to two points lower
Parekh guided gross margin to 45% to 46%, which is one to two points below the 46.9% September margin without tariff refunds. He attributed it primarily to higher memory costs and said some of it comes from the cost of the Siri AI ramp. Our December quarter guidance post has the full outlook.
Revenue is guided to grow 7% to 10%, which Parekh said reflects Apple’s best view of constrained supply, and Apple expects it to be the best quarter for revenue in its history. Services is guided to grow 8% to 9%, with third-party licensing and foreign exchange as the sequential headwinds. Apple has said it expects memory costs to keep rising through at least the end of the year.
Supply limits and price increases are how Apple absorbs memory costs
Parekh said supply constraints held back iPhone, Mac and iPad in the quarter. Mac revenue still rose 24% to $10.8 billion, which he credited to the MacBook Neo and MacBook Pro, while iPad revenue fell 10% to $6.2 billion on supply constraints and a tough comparison with the A16 iPad launch.
The price increases are the other half of the response. The Mac Studio with M3 Ultra rose $1,300 to $5,299 in June, the MacBook Neo went from $599 to $699, and the iPhone 18 Pro and iPhone 18 Pro Max launched $100 higher at $1,199 and $1,299. Our Apple price increase list covers every product, and the fall launches stayed at or above the June levels.
Tim Cook said on the July 30 call that Apple would partly offset memory costs with lower prices on some other components and with existing inventory. He also said more memory suppliers might not lower prices.
SK hynix said on October 28 that demand will exceed supply through 2030, and 14 of its customers have signed long-term agreements covering more than half of its 2027 and 2028 capacity. That shortage outlook leaves Apple competing for the remaining supply.
TrendForce expects notebook shipments to fall in 2027 by a low-single-digit percentage, or a high-single-digit one if brands pass on the full cost. TSMC is also raising chip prices by as much as 10% from January 1, 2027.
