TLDR
- Apple delivered $143.8 billion in quarterly revenue, marking a 16% year-over-year increase with similar growth expected next quarter.
- The company can’t get enough 3-nanometer chips from TSMC to satisfy iPhone customer demand.
- Supply chain constraints could limit March quarter sales despite strong consumer interest in devices.
- AI-driven memory chip price increases will impact gross margins more in the current quarter than last.
- Apple exceeded its domestic chip sourcing goal, bringing in 20 billion chips from U.S. facilities in 2025.
Apple crushed expectations Thursday with a monster quarter. But the company says it’s leaving sales on the table.
The tech giant posted $143.8 billion in revenue for its first quarter. That represents a 16% jump from the year-ago period. Management forecasts 13-16% growth for the March quarter.
Here’s the problem: Apple can’t build enough iPhones.
It’s not a demand issue. Customers want to buy them. The company just can’t secure enough advanced chips to keep up.
CFO Kevan Parekh told analysts the March quarter guidance “comprehends our best estimates of constrained iPhone supply.” In plain English, sales projections would be higher without the chip crunch.
Advanced Node Manufacturing Hits Capacity Limits
Taiwan Semiconductor Manufacturing Co. produces Apple’s custom processors. The iPhone’s A-series chips and Mac’s M-series processors use cutting-edge 3-nanometer technology.
That’s where production is maxed out.
CEO Tim Cook explained the constraints come from “the availability of the advanced nodes that our SoCs are produced on.” He added Apple sees “less flexibility in supply chain than normal, partly because of our increased demand.”
TSMC controls the market for leading-edge chip manufacturing. But even the industry leader can’t expand capacity overnight. Apple is competing with other tech giants for limited production slots.
Cook said the company is working to boost supply access. He declined to predict when constraints might ease beyond the March quarter.
AI Boom Pushes Memory Costs Higher
Artificial intelligence data centers are gobbling up memory chips. That’s driving prices up across the industry.
Cook acknowledged rising memory costs had “minimal impact” on Apple’s margins in the December quarter. He expects “a bit more of an impact” hitting the March quarter bottom line.
The company isn’t revealing its playbook for handling the situation. Cook simply said Apple “will look at a range of options to deal with that.”
Despite the headwinds, Apple projects gross margins of 48-49% for the current quarter. That’s actually higher than the December quarter at the midpoint.
U.S. Chip Strategy Delivers Results
Apple pledged over $600 billion in U.S. spending across five years. A large portion funds companies building domestic chip manufacturing plants.
The bet is working. Cook disclosed Apple sourced 20 billion chips from American manufacturers in 2025. That surpasses the company’s 19 billion chip target.
TSMC traditionally concentrated manufacturing in Taiwan. The company is now expanding stateside operations with support from Apple and other major customers.
Device makers worldwide are grappling with component shortages. AI applications created fierce competition for both advanced chip production and memory supplies.
During the earnings call, analysts repeatedly questioned Cook about supply chain access. The persistent focus underscores broader industry anxiety about component availability.
Apple projects gross margins between 48% and 49% for the March quarter ending in a few weeks.
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