Apple revenue surges 16% driven by "staggering" iPhone 17 demand amid memory chip scarcity
- Marijan Hassan - Tech Journalist
- 3 hours ago
- 2 min read
Revenue hits $143.8 billion as iPhone sales soar 23%; memory chip shortages and AI server priorities squeeze global supply.
Apple kicked off 2026 with a blockbuster earnings report on January 29, posting its best quarterly iPhone sales growth in over four years. Revenue climbed 16% year-over-year to a record-breaking $143.8 billion, largely fueled by an "unprecedented" appetite for the iPhone 17 lineup. Despite the stellar numbers, CEO Tim Cook warned that a global scarcity of memory chips and 3nm processors is limiting the company’s ability to meet the "simply staggering" demand.
The results mark a dramatic turnaround for Apple, particularly in Greater China, where sales surged 38% to $25.5 billion, silencing critics who feared the tech giant was losing ground to local competitors.
iPhone 17: The "super-cycle" returns
The core of the record-breaking quarter was the iPhone, which alone generated $85.3 billion in revenue (up 23% from last year).
Consumers flocked toward the high-end iPhone 17 Pro and Pro Max models, which boosted average selling prices and expanded gross margins to a healthy 48.2%.
Cook noted a record wave of people switching over from Android during the holiday quarter, alongside a massive upgrade cycle from users who had skipped the previous two iPhone generations.
The Services segment, including iCloud, Apple Music, and the App Store, hit its own all-time record of $30 billion, providing a stable, high-margin anchor for the business.
Battling chip scarcity
The celebration was tempered by significant warnings about the supply chain. Apple is currently in "supply chase mode," where it cannot manufacture devices fast enough to match orders.
The memory crunch
Global manufacturers like Samsung and SK Hynix are diverting production capacity toward high-bandwidth memory for AI data centers, causing a shortage of the DRAM and NAND chips used in smartphones.
Apple is also competing for limited capacity at TSMC for its advanced 3nm processors. Cook admitted that while the impact was minimal in the holiday quarter, memory prices are expected to "increase significantly" in the coming months, potentially squeezing hardware margins.
Strategic delays
To manage the scarcity, reports from Nikkei Asia suggest Apple is prioritizing its most expensive models, including its anticipated first foldable iPhone, while potentially delaying the standard iPhone 18 rollout into 2027.
R&D and the AI roadmap
While hardware remains the revenue king, Apple’s Research & Development (R&D) spending jumped to $10.9 billion this quarter. CFO Kevan Parekh confirmed that "AI is going to require incremental investment on top of our normal roadmap."
This spending is aimed at the company’s 2026 goal of turning Siri into a fully generative AI chatbot (code-named "Campos") to compete with Google and OpenAI.
Investors seem cautiously optimistic. Although the stock initially dipped due to supply concerns, it closed higher as analysts praised Apple's "execution over hype."
