Apple's inventory increased by 154% year-on-year, while memory costs continue to rise

Apple's fiscal fourth-quarter results announced on Monday show that the company continues to stockpile inventory, particularly in computer memory. Inventory increased from $11.09 billion in the third quarter to $14.54 billion in the fourth quarter, a quarter-over-quarter increase of 31.1%; year-over-year, it grew 154.3% from $5.72 billion in the fourth quarter of 2025.

Apple expects a gross margin of 45% to 46% for the December quarter, primarily affected by higher memory costs, compared to a gross margin of 47.9% in the September quarter. Apple CEO John Ternus stated during the analyst call that current memory pricing is unprecedented. He noted that memory costs in the September quarter were higher than in the June quarter, partially offset by inventory gains and a decrease in some non-memory component costs, and he anticipates that memory costs will rise further in the December quarter.

Ternus mentioned that higher costs will be partially offset by price increases on products earlier this year, including price hikes for Mac and iPad at the end of June and for iPhone in September; memory costs will continue to rise after December, and inventory gains will decline over time. To improve supply, manufacturing procurement obligations increased by $33 billion from the June to September quarters. Chief Operating Officer Sabih Khan also attended the call, reiterating the increase in procurement obligations but did not rule out further price increases in the future. Apple attributed weak iPad sales this quarter to supply constraints, with iPad revenue at $6.2 billion, below analyst expectations of $6.7 billion, a year-over-year decline of 10%, while iPhone and Mac sales exceeded expectations.