Apple (AAPL) Stock: Can’t Make iPhones Fast Enough as Chip Supply Runs Short

TLDR

• Apple reported record revenue of $143.8 billion in Q1, up 16% year-over-year, and predicts 13-16% growth for the current quarter.
• iPhone sales could be higher, but Apple cannot secure enough advanced chips from TSMC to meet customer demand.
• The company faces constraints in 3-nanometer chip production due to limited manufacturing capacity at Taiwan Semiconductor.
• Rising memory chip prices driven by AI data center demand had minimal impact last quarter but will affect margins more this quarter.
• Apple sourced 20 billion chips from U.S. manufacturers in 2025, exceeding its 19 billion target.

Apple posted record-breaking numbers on Thursday. But the company says it could do even better if it had more chips.

The tech giant reported $143.8 billion in revenue for its first quarter. That’s a 16% jump from the same period last year. The company expects similar growth between 13% and 16% in the current quarter ending in March.

CEO Tim Cook told analysts the problem isn’t a lack of customer interest. It’s a supply issue. Apple can’t get enough advanced chips to make all the iPhones people want to buy.

The bottleneck sits at Taiwan Semiconductor Manufacturing Co. TSMC makes Apple’s custom processors using 3-nanometer technology. These chips power the iPhone’s A-series and Mac’s M-series processors.

Memory Prices Adding Pressure

Memory chip prices are climbing too. The surge comes from AI data center demand eating up supply across the industry.

Cook said rising memory costs had a “minimal impact” on Apple’s profit margins in the December quarter. But he expects “a bit more of an impact” in the March quarter.

The company expects gross margins between 48% and 49% for the current quarter. At the midpoint, that would actually be higher than the December quarter. So the memory price issue isn’t crushing Apple’s profits yet.

U.S. Chip Manufacturing Beats Target

Apple has been working to source more chips domestically. Last year, the company committed to spend over $600 billion in the U.S. over five years. A big chunk of that money goes to companies building chip factories in America.

Cook revealed that Apple sourced 20 billion chips from U.S. manufacturers in 2025. That beats the company’s earlier target of 19 billion chips.

TSMC has historically done most of its manufacturing in Taiwan. But the company has been expanding its U.S. operations.

Cook said Apple is working to increase its access to chip supply. But he wouldn’t forecast how long the constraints might last beyond the March quarter.

The chip shortage affects nearly every device maker in the world. AI demand has created competition for both advanced manufacturing capacity and memory components. Apple is feeling the squeeze despite its position as one of the world’s largest chip buyers.

Apple’s earnings call focused heavily on the supply chain challenges. Analysts pressed Cook multiple times about memory component access and chip availability. The questions reflect broader industry concerns about component shortages.

Apple sourced 20 billion chips from U.S. manufacturers in 2025, exceeding its target of 19 billion.

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