TLDR
- Apple reported $143.8 billion in first-quarter revenue, reflecting 16% year-over-year growth with forecasts for similar expansion.
- iPhone production is limited by TSMC’s 3-nanometer chip manufacturing capacity, preventing Apple from meeting full customer demand.
- Rising memory chip prices driven by AI infrastructure needs will pressure profit margins more this quarter.
- The company projects 48-49% gross margins for the March quarter despite component cost increases.
- Apple brought in 20 billion chips from U.S. production facilities in 2025, topping its 19 billion goal.
Apple just posted one of its best quarters ever. The company could have done even better.
The iPhone maker reported $143.8 billion in quarterly revenue Thursday. That’s a 16% increase compared to last year. Apple expects growth of 13-16% in the current quarter.
But there’s a catch. The company can’t make enough iPhones to satisfy everyone who wants one.
It’s a supply problem, not a demand problem. Customers are ready to buy. Apple just doesn’t have enough chips.
CFO Kevan Parekh said March quarter guidance reflects “our best estimates of constrained iPhone supply during the quarter.” Without the chip shortage, revenue projections would be higher.
TSMC Production Capacity Maxed Out
Taiwan Semiconductor Manufacturing Co. makes Apple’s processors. The company uses 3-nanometer technology for iPhone A-series chips and Mac M-series processors.
Production capacity at that level is tapped out.
CEO Tim Cook pointed to “the availability of the advanced nodes that our SoCs are produced on” as the main constraint. He noted Apple sees “less flexibility in supply chain than normal, partly because of our increased demand.”
TSMC leads the world in advanced chip manufacturing. But capacity doesn’t expand overnight. Multiple tech companies are competing for limited production slots.
Cook confirmed Apple is working to secure more supply. He wouldn’t estimate when the situation might improve beyond the March quarter.
The company is basically selling every iPhone it can build. If TSMC could make more chips, Apple could make more phones.
Memory Component Costs Climbing
Artificial intelligence applications are eating up memory chip supply. That’s pushing prices higher across the tech sector.
Cook said rising memory costs created “minimal impact” on margins last quarter. He expects “a bit more of an impact” in the current March quarter.
Apple isn’t detailing specific strategies to handle the price increases. Cook told analysts the company “will look at a range of options to deal with that.”
The company still expects healthy gross margins between 48% and 49% this quarter. At the midpoint, that’s actually better than the December quarter.
So while memory prices are rising, they’re not crushing Apple’s profitability yet.
Domestic Chip Production Exceeds Target
Apple committed to spend more than $600 billion in the United States over five years. Much of that investment supports companies building chip factories on American soil.
The strategy is delivering results. Cook revealed Apple sourced 20 billion chips from U.S. manufacturers during 2025. That beats the company’s earlier target of 19 billion chips.
TSMC has historically done most manufacturing in Taiwan. The chipmaker is now expanding U.S. operations with backing from Apple and other major tech firms.
Component shortages are hitting device makers everywhere. AI demand created intense competition for both advanced manufacturing capacity and memory supplies.
Analysts questioned Cook repeatedly about supply chain issues during the earnings call. The persistent questions reflect widespread industry concerns about component availability.
Apple is working to increase its access to chip supply but declined to forecast improvements beyond March.
