According to Ming-Chi Kuo, Apple plans to maintain the iPhone 18's starting price, despite rising DRAM costs. These memory price increases are anticipated in Q2 2026, similar to earlier hikes. The surge is influenced by AI industry demand, leading to chip manufacturers prioritizing advanced memory for AI servers over smartphones. This move will impact Apple's gross margins.

Apple has a history of absorbing component cost increases. The company is in a strong position to negotiate with suppliers and mitigate the financial impact. The strategy appears to be securing chip supplies and potentially gaining market share. This approach mirrors the company's handling of the iPhone 17, where the base model pricing remained stable.

However, higher memory costs will affect the iPhone's gross margins, but Apple's strategy is clear: use the market situation to its advantage. Secure the chips, absorb the costs, and increase market share. They will make it back later on the services side. Other components could also face shortages, possibly leading to further supply chain issues.

It's worth noting that further details on the memory price increases may be discussed during Apple's January 30 earnings call. The iPhone 17 Pro saw a price increase due to storage, but the base model remained steady. The situation underscores the complicated dynamics of smartphone manufacturing.