Apple’s new CEO John Ternus has been in the top job for less than a month, and he is already dealing with a problem left behind by his predecessor: surging memory prices that are squeezing the company’s margins. According to a Sept. 29 Bloomberg report cited in the MarsBit article, Ternus is planning layoffs of varying sizes across multiple departments and is also canceling some early-stage development projects seen as making limited contributions to revenue.
The report frames the move not as routine cost control, but as a forced contraction as AI-era supply chain dynamics reshape bargaining power.
Layoffs target management layers and selected teams
Ternus’s operating logic is described as making Apple faster and leaner. Over the past two weeks, Apple’s hardware engineering division has already cut some engineering program manager, or EPM, roles, including about six director-level managers. Those employees were given several weeks to seek internal transfers. Anyone unable to secure a new role will leave later this year.
The report says Ternus wants to reduce middle-management redundancy and shift decision-making weight back toward engineering teams. Siri, Vision Pro, and AI software engineering teams have also gone through small adjustments.
Apple had also drawn up a plan this summer to cut about 5,000 AppleCare customer service roles and replace them with upgraded AI support tools. That plan was paused after Ternus took over. The report says the decision to halt a more aggressive AI-for-labor substitution plan suggests he is looking for a more conservative balance between cost pressure and organizational stability.
Memory inflation is the immediate trigger
The direct trigger behind the cuts is the sharp rise in memory chip costs.
Morgan Stanley estimates that Apple’s gross margin guidance for the fourth quarter of 2026 is in the 47% to 48% range, with higher memory costs cited as the core reason. TrendForce data in the report gives a more detailed picture: using the 256GB iPhone 18 Pro as a sample, the total bill of materials rose about 38% year over year, while memory’s share of that cost climbed from about 10% a year earlier to roughly 34%, making it the largest cost item. That share is expected to exceed 40% in the first half of 2027.
The pressure is not unique to Apple. The report says DRAM contract prices went through several notable increases in 2026. Samsung Electronics and SK Hynix kept raising DRAM prices, and NAND prices also posted sizable gains. Supply has been slow to respond because advanced capacity at Samsung, SK Hynix, and Micron has already been locked up by AI server customers, while HBM and DDR5 production lines are taking wafer space away from conventional DRAM.
In his final earnings call, Tim Cook openly acknowledged the forced price increases. “On pricing, I would say we raised prices reluctantly,” he said. “The reason we did that is because I would describe current memory pricing as a ‘once-in-a-century flood,’ and it is rising exponentially.”
In June 2026, Apple raised prices across its Mac and iPad lineup. The MacBook Air went from $1,099 to $1,299, while the iPad Air rose from $599 to $749, for overall increases of about 17% to 25%.
The report argues that the core issue is that Apple, long seen as one of the world’s strongest supply chain operators, has lost some of its pricing power in a seller’s market. A company that does not build AI infrastructure is now paying more for memory as AI infrastructure demand reshapes semiconductor allocation.
Services revenue is also losing momentum
If memory inflation is the external shock, the slowdown in services is the internal strain.
In the June 2026 quarter, Apple’s services business generated $30.74 billion in revenue, up 12% year over year but below analyst expectations of $31.3 billion to $31.4 billion. It also fell nearly 0.8% from the prior quarter, ending a run of more than three years of record quarterly services revenue. The report says this was Apple’s first quarter-over-quarter decline in services revenue since 2022.
Morgan Stanley tracking data also showed App Store net revenue fell 0.6% year over year from early to mid-August, the first such decline in four years.
Services has long been Apple’s highest-margin segment, with a gross margin of about 75.6%, and Wall Street has treated it as a cushion against swings in hardware cycles. Once that cushion starts to thin while hardware margins are being compressed by memory costs, Apple’s profit structure comes under pressure from both sides.
The report says the European Union’s Digital Markets Act requires Apple to let developers collect subscription payments outside the App Store, directly weakening its commission model. Slower growth in the mobile gaming market has also reduced App Store revenue momentum. Morgan Stanley analysts said services growth is unlikely to rebound sharply in the near term because of lower App Store take rates, external links, weak gaming demand, and foreign exchange headwinds.
Apple’s room to maneuver in sourcing is narrowing
The report contrasts the Apple Ternus inherited with the Apple Tim Cook took over in 2011. Under Cook, Apple used scale purchasing to push supplier prices down. Under Ternus, Apple is operating in a market where AI computing demand has changed semiconductor capacity allocation, turning Apple from a price setter in memory into a buyer waiting in line.
Apple is already testing alternatives. According to the report, the company is testing DRAM chips from China’s ChangXin Memory Technologies, or CXMT, for iPhones and Macs sold in China. Apple has also continued lobbying the U.S. government for permission to buy chips from CXMT and Yangtze Memory Technologies, or YMTC, with the proposal limited to devices sold in mainland China. That proposal, however, has faced opposition from hardliners in Congress and the Commerce Department.
The report says Apple’s room to balance “decoupling” against cost is getting tighter.
The cuts are described as defensive, not offensive
Against that backdrop, Ternus’s layoffs are presented as a defensive adjustment rather than an offensive restructuring. Cutting middle-management roles, canceling early-stage projects, and limiting budget growth are all aimed at protecting margin floors and preserving room for the 2027 product cycle.
If memory shortages worsen, the savings from layoffs could at least partly offset the impact of higher chip prices and reduce the need for another major round of price increases in 2027.
Still, the report says layoffs can only do so much. TrendForce has raised its forecast for the average selling price growth of HBM in 2027 to 121% year over year and expects tight memory supply to last through 2027 and possibly longer. That means Ternus is not dealing with a short cycle that can simply be endured. As HBM takes up a larger share of DRAM capacity, Apple’s iPhone and Mac lines are being pushed further back in the queue for memory chips by AI data centers.
Ternus comes from a hardware engineering background and has long overseen development of the Mac, iPhone, and AirPods. The report closes on a practical point: once a memory chip accounts for more than one-third of a product’s bill of materials, both pricing flexibility and design freedom are redefined. Layoffs may buy Apple one or two quarters of breathing room, but the larger question is how a consumer hardware company redraws its supply chain security boundary in an era when memory has become a scarce strategic resource.
This article was sourced from the WeChat public account Tech商业, authored by Tech商业.