Apple's inventory surged 154% year-over-year in the fourth quarter, climbing to $14.54 billion from $5.72 billion in the same quarter last year, driven largely by the company stockpiling memory chips as costs climbed.
The company reported inventory grew 31.1% quarter-over-quarter, from $11.09 billion in Q3 to $14.54 billion in Q4. CEO John Ternus told analysts that memory pricing was "unprecedented" and that the company expected "even higher memory costs" in the December quarter.
Apple forecasted a gross margin of 45% to 46% for December, down from 47.9% in September, citing the impact of higher memory costs. Ternus said price increases implemented in June on Mac and iPad, and in September on iPhones, would partially offset the higher costs in December. Beyond December, he said Apple expects memory costs "continuing to increase."
The company increased manufacturing purchase obligations by $33 billion from June to September, Ternus said, as it works to improve supply. Chief Operating Officer Sabih Khan, who oversees supply chain and manufacturing, joined the earnings call to address questions about memory but did not rule out future price increases on Apple devices.
iPad sales underperformed, with revenue of $6.2 billion falling short of analyst expectations of $6.7 billion and down 10% year-over-year. The company blamed supply constraints for the weak iPad quarter, while iPhone and Mac sales beat estimates.