Apples iPhone Pricing Power|Can the Upgrade Cycle Beat Memory Costs?

The iPhone Price Problem

Apple’s stock dipped 2% after Jefferies downgraded it to underperform. The trigger was not a collapse in current sales, but the possibility that Apple has lost a product lever it usually uses to charge more.

Supply-chain checks indicated that an all-glass iPhone planned for the next major cycle was canceled because production yields were too low. The question is whether Apple can raise prices through other models while memory costs are already pressing on the hardware business.

Apple’s latest fiscal third-quarter revenue rose 16% year over year to $109.42 billion, beating the $108.65 billion estimate. That gives the bullish case a real starting point, but it also makes the missing pricing lever more important because the market is paying for the next step, not the last quarter.

The Missing Hardware Lever

Jefferies’ logic is that the all-glass design could have lifted average selling prices at a moment when Apple needs more revenue per device. Without it, the foldable iPhone becomes the main visible candidate for that job, leaving less room for execution mistakes.

One industry account says the cost of making iPhones has risen 38% because memory prices have surged, nearly sevenfold since the beginning of 2025. The deeper problem is supply: Samsung, Micron, and SK Hynix were reported to have sold through their DRAM production for 2027, so paying more may not secure enough components.

Apple is testing memory from China’s CXMT and seeking permission to use it in devices made and sold in China. Because China accounts for around 20% of Apple hardware sales, that route could free other memory capacity for products sold elsewhere, but it also introduces a regulatory dependency into the pricing story.

Ming-Chi Kuo disputed the rumor that TSMC was holding a billion-dollar stockpile of unfinished Apple chips, arguing that Apple and TSMC plan processor production around available memory. That correction removes the most dramatic version of the story, not the underlying constraint, because Kuo still said Apple’s hardware shipments had been downgraded for 2026.

What the Market Is Already Betting

Options positioning shows a 0.65 put-to-call ratio, with call open interest concentrated at the 315 and 317.5 strikes above the 312.5 at-the-money line. That is a bullish positioning signal, but the 14.2% implied volatility says traders are not pricing a dramatic binary break today.

Gene Munster argues that a major consumer hardware upgrade cycle could begin around 2027 and make higher iPhone prices manageable. The counterweight is that Apple’s expected revenue growth slows to 9%–11% in the fourth quarter from 16% in the third, while the stock trades near 35 times forward earnings against lower multiples for faster-growing peers.

The disagreement is therefore not simply whether people still want iPhones. It is whether Apple can convert that demand into enough pricing and margin to justify the valuation after the most ambitious new form factor disappeared.

The September Discriminator

The September iPhone launch is the earliest event that can test both sides of this argument. Watch the announced price and the first preorder or availability signal together, because either one alone can hide the effect of memory costs.

For holders, the read survives if Apple raises prices without needing unusually rich trade-in support and still keeps supply available. For watchers, the entry case strengthens only if that price increase is accepted without an early demand concession.

The move becomes an opportunity if September buyers accept the higher price while availability remains intact; it becomes a trap if trade-ins, discounts, or constrained supply are doing the work that demand should do. The decisive checkpoint is the first September price-and-preorder read, not another analyst target.