Apple Ramps Up Commitments to Combat Memory Crunch -- WSJ

By Rolfe Winkler

Huge price increases in the memory markets are forcing Apple to get over its fear of commitment.

Three times during its earnings call Monday, executives told analysts that to deal with the memory crunch, Apple increased its "manufacturing purchase obligations" by $33 billion. The executives didn't provide details but analysts suspected that a big chunk of that amount is to lock up supplies of memory longer-term.

Avoiding commitments has been a secret of Apple's operational success, especially when buying memory chips that go into every iPhone, iPad, and Mac. It has used its purchasing heft to stay flexible, buying what it needs when it needs it.

Apple made the shift in Tim Cook's last quarter as chief executive, and as John Ternus took over, showing how the company is reacting to what Ternus termed an "unprecedented" spike in the memory market.

At the end of the past three fiscal years Apple's manufacturing purchase obligations stood at just above $50 billion. In its annual filing published Tuesday, Apple disclosed that ending this fiscal year the figure stands at $89.7 billion.

That is the highest the figure has ever been for Apple, though not itself unprecedented by historical standards when comparing against the size of Apple's business. The figure published yesterday represents about 132 days of costs to make its products, using analysts' cost estimates for the upcoming year. That's more than the average of around 100 dating back to 2016, but below the peak level of 137 reached in September 2022.

Apple also might have wiggle room to back out of some of these commitments. Up until 2023 it described its manufacturing purchase obligations as "primarily noncancelable." It no longer does.

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November 03, 2026 14:50 ET (19:50 GMT)