Apple in its Q2 earnings call on Tuesday, May 2, accepted that the prices of Dynamic Random Access Memory or DRAM and NAND are on a rise. The company expects the price to continue rising in the next quarter as well. Thus, Apple could slash the DRAM capacity in its upcoming anniversary iPhone thanks to the price rise in the sector, which will impact Apple’s profit margins.

Price rise can affect iPhone price or memory capacity?

Tech experts are indicating that the DRAM price rise can affect the memory capacity of the next iPhone dubbed iPhone 8 or iPhone X.

Trendforce, which monitors the DRAM and SSD pricing in the market, predicted that the recent price rise of DRAM will force Apple to limit iPhone 8’s memory at 3 GB of DRAM only. It also stated that the consumers will have to wait for quite some time – probably 2018 or 2019 – till the successor of the smartphone gets launched, to get a 4 GB of DRAM iPhone in their hands.

Rumors are buzzing that Apple will launch three iPhones this year. One will be the company’s tenth-anniversary edition while the other two iPhones – allegedly dubbed iPhone 7s and iPhone 7s Plus – will be the successor of iPhone 7 and iPhone 7 Plus. It is being hinted that the iPhone 7s and iPhone 7s Plus would sport 5.5-inch and 5.8-inch AMOLED displays, respectively.

Price rise: causes and its potential effects

Shortage of components required to manufacture a DRAM is being hailed as the reason behind the price rise of the same. To get an edge over competitors in the smartphone market (and to provide the users with additional memory for gaming, multimedia, artificial intelligence, and virtual reality), most OEMs these days put in ample amount of Dynamic Random Access Memory and flash memory in their smartphones.

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A recent example of the same in the Samsung Galaxy S8+ 6 GB of RAM special edition, which is available in select countries.

Trendforce also shared that the price of mobile DRAMs such a, LPDDR4 will continue to rise in 2017 and may even see a 10 percent increase. In April, American research and advisory firm Gartner indicated that the prices for flash storage and DRAM will decline starting from 2018 and crash in 2019.

Currently, prices of smartphones have increased due to the rise of price in Dynamic Random Access Memory prices.

In its Q2 earnings call, Apple stated that the cost of all the existing models of iPhones have increased from an average selling price of $642 in 2016 to $655 this year. The company buys NAND flash memory and Dynamic Random Access Memory in large quantities for the manufacturing of its smartphones. Therefore, at this juncture high DRAM capacity will not only increase the manufacturing costs of the iPhone, but will also hit Apple’s profit margins severely.