Source | Bohu Finance (bohuFN)

Author | All too well

The plot of the second quarter is still unfolding in the fourth quarter.

On the early morning of January 30, Apple released its Q1 2026 fiscal year (Q4 2025 calendar year) results after the U.S. stock market closed, revealing another record-high revenue. This quarter, Apple's revenue soared to $143.756 billion, up 16% year-over-year.

Its profitability is even more enviable: last quarter's gross margin reached 48.2%, with net profit at $42.097 billion, up 16% year-over-year.

Let's take a look at Apple's 'lonely peak' with a chart:

According to Counterpoint's Q4 2025 global smartphone market data, Apple's average selling price (ASP) reached $1,011, roughly 7,019 yuan; meanwhile, OPPO, Samsung, Vivo, and Xiaomi had ASPs around $200 or even lower.

The reasons for the soaring performance are similar, with the iPhone and the Chinese market being key drivers.

Last quarter, iPhone revenue surged 23% year-over-year to $85.27 billion, exceeding both market expectations and Apple's own internal forecasts, hitting a new quarterly record. While Apple didn't disclose specific sales volumes, at an average price of around $1,000, it translates to nearly a million iPhones sold per day since the new iPhone's launch.

Everyone is talking about the new iPhone's strong sales, but no one expected it to reach this level.

Even more surprising was the Chinese market. After several quarters of pressure, Greater China saw a clear rebound with the new iPhone's launch, generating $25.526 billion in revenue last quarter, up 38% year-over-year.

While the financial results are impressive, Apple hasn't really addressed the issues the outside world truly cares about.

01 Concerns Over Memory Price Hikes

The iPhone 17 series is selling exceptionally well, as Tim Cook stated on the earnings call: 'This is our strongest iPhone lineup ever and by far our most popular. Throughout the quarter, consumer enthusiasm for iPhone was unprecedented, with users showing great excitement for its features.'

But this success isn't due to innovation—Apple is still criticized for lacking 'revolutionary technology.' Instead, the iPhone 17 standard model stands out due to its comprehensive upgrades and exceptional cost-effectiveness, especially evident in the Chinese market.

But can Apple continue to profit like this under current conditions?

TrendForce data shows that in Q1 2026, general-purpose DRAM contract prices will rise 55-60% quarter-over-quarter, while NAND flash memory will increase 33-38%.

The direct result is that memory costs now account for 20-30% of a smartphone's bill of materials (BOM), up from 10-15%, reaching 34% for mid-to-low-end models.

Translated to per-unit costs, memory expenses have increased by about $16, a nearly 37% rise. For mid-to-low-end devices, this additional cost approaches 6% of the average selling price, leaving almost no room for absorption.

And no one knows how long this price hike cycle will last.

The root cause of this surge lies in the explosion of generative AI: AI servers consume 8-10 times more DRAM and NAND than regular servers, with single large model training projects often requiring terabytes of memory, rapidly consuming production capacity.

More critically is HBM. Its wafer capacity consumption per unit capacity is about three times that of traditional DDR5, with complex processes and lower yields but higher profits. Driven by these high returns, Samsung, SK Hynix, and Micron have shifted significant capacity and R&D resources toward HBM and enterprise-grade DDR5 to meet AI data center demands, directly squeezing supply for consumer-grade DDR4 and DDR5, creating a 'supply cliff' and becoming the core reason for this memory price spike.

The impact of memory price hikes has spread across multiple markets, including smartphones, computers, and smart cars.

Brands like Xiaomi, OPPO, and Honor have raised starting prices for several new models by 100-600 yuan since late 2025; others have shifted costs by 'downgrading specs to maintain prices,' such as reducing memory from 16GB to 12GB. Even Lei Jun lamented, 'Memory prices have risen too much.'

Compared to its peers, Apple has been less affected but not immune.

Cook revealed that memory prices had a relatively small impact on product gross margins this quarter but expects a more pronounced effect next quarter. Apple is internally evaluating response strategies to the rising memory prices.

Currently, iPhone memory procurement negotiations have shifted from semi-annual to quarterly. In Q2 this year, iPhone memory quotes will see another significant increase. South Korean media ZDNET Korea reported that Samsung Electronics and SK Hynix have negotiated with Apple to substantially raise prices for LPDDR memory used in iPhones, with increases up to 100%.

Analyst Ming-Chi Kuo stated that for the iPhone 18 series launching in the second half of this year, Apple's pricing strategy aims to avoid price hikes as much as possible, at least maintaining starting prices to preserve market share.

Price hikes could affect sales, while not raising prices impacts profits. How Apple will choose remains to be seen.

02 How Is Apple's AI Faring?

But the outside world's expectations for Apple extend far beyond selling more iPhones—most people care more about how Apple's AI is performing.

In the past AI wave, Apple seemed to be 'a step behind.' While Microsoft, Google, and Amazon ramped up investments in cloud computing and large models, Apple remained restrained.

This caution stems from its core value of 'privacy protection.'

Apple firmly believes that AI's future must be built on safeguarding user data. This means it cannot, like other companies, centralize massive user data in the cloud for training and inference. Instead, it has chosen a more complex path: device-based inference supplemented by private cloud computing.

If you ask Siri to remind you about a meeting tomorrow, other companies might upload your schedule to the cloud for processing. Apple, however, tries to handle this reminder on your iPhone without uploading your information to the cloud. Only in very complex scenarios will it use Apple's own cloud for auxiliary computation, without saving the original information.

However, constrained by the computational power, power consumption, and cooling conditions of smartphone chips, device-based AI struggles to smoothly run large models with massive parameters. This directly results in early Apple Intelligence being unable to compete with cloud-based large models in terms of feature richness and response speed.

As time passed, external doubts about Apple's lagging AI grew, with Siri even becoming a target of jokes. So, with internal AI model progress stalled and the new Siri repeatedly delayed, Apple ultimately abandoned its path of complete reliance on self-developed models, turning to deeper cooperation with Google.

In mid-January, Apple reached an agreement with Google: the next-generation Apple foundational model will be built on Google's Gemini large model and cloud technology, providing core support for the upcoming personalized Siri.

However, Google is not taking over Siri. Cook revealed that Gemini's role primarily involves training and capability enhancement, helping Apple improve its own foundational models. What iPhone users will interact with remains Apple's own models and system experience.

He also emphasized that Apple will continue to independently advance some R&D work, maintaining a device-cloud hybrid architecture and upholding its existing privacy standards. Financial arrangements between the two companies were not disclosed.

From an effectiveness standpoint, by leveraging Google's cutting-edge technology in large models, Apple has quickly addressed its capability gaps in generative AI, enabling the new Siri to handle more complex semantics and instructions. On the other hand, Apple can still uphold its privacy bottom line (bottom line), storing user data locally or in Apple's private cloud. Google cannot access any user privacy data, only earning technical service fees through licensed models.

According to Bloomberg, Apple will release a new Gemini-powered Siri in the second half of February. This will fulfill Apple's June 2024 promise to complete tasks by accessing users' personal data and screen content.

A larger-scale upgrade will be announced at this year's Worldwide Developers Conference in June. According to Bloomberg, the all-new Siri, codenamed Campos, will launch with iOS 27, featuring conversational interaction and capabilities competitive with ChatGPT and Gemini, potentially running directly on Google's cloud infrastructure.

But how well Apple's AI will perform remains to be seen.

03 Apple Will Be Very Busy in 2026

2026 is likely to be Apple's busiest year for new product launches in recent memory. Multiple sources indicate that Apple plans to release over 20 new products in 2026, comprehensively covering smartphones, computers, home devices, and other fields. In the absence of a 'blockbuster product,' consolidating market position through multi-line layout (layout) is a sound decision.

First, the long-rumored foldable iPhone is finally making substantial progress. More details have emerged about the iPhone Fold launching in 2026: it will feature a wide-folding design, retain volume buttons at the top, and have a 5,500mAh battery—'the largest battery ever in an iPhone'—potentially filling Apple's gap in the foldable market.

Second are product upgrades and market expansion.

In terms of product upgrades, Apple continues its annual iteration rhythm. For example, this year's new MacBook Pro will feature TSMC's 2nm process M6 chip, with 'design changes' frequently mentioned—thinner body, narrower bezels, a new cooling design, and for the first time, an OLED screen. This upgrade isn't just about performance improvements but represents Apple's attempt to find a new balance between design, display effects, and core performance, retaining core consumers with a superior product experience.

In terms of market expansion, the most noteworthy is the 'downward expansion' of the MacBook lineup: a more affordable MacBook has been anticipated by the market for years, and in 2026, this budget MacBook will officially debut. It will feature an A-series chip, targeting students, light office users, and basic content consumers. While not pursuing extreme performance, it will ensure system integrity, battery life, and operational stability, allowing entry-level users to experience Apple's ecosystem advantages and expanding its user base.

Additionally, home devices have become a strategic focus. The HomePod and first-ever security camera not only fill gaps in home entry points but also compete for the central position in the home. The camera can recognize different users, automatically switching desktops and preferences; Siri will upgrade to a household manager capable of executing complex instructions, further enhancing the home ecosystem experience.

Notably, TechCrunch reported that Apple acquired the Israeli AI startup Q.ai for nearly $2 billion, its second-largest acquisition ever. Q.ai excels in imaging and machine learning, particularly in whisper recognition, audio enhancement in noisy environments, and facial micro-expression detection. This will strengthen interactions on devices like AirPods and Vision Pro, providing consumers with a better experience.

Overall, Apple's 2026 product strategy seems 'stable'—not putting all eggs in one basket. When unable to deliver the next iPhone, this isn't a bad approach. However, 'stability' is certainly not what the outside world expects from Apple.

Referenced Sources:

1. Letter List: Apple's iPhones Are Selling Like Crazy Again, But When Will Tim Cook Retire?

2. Leikeji: Apple's Explosive 2026 Updates: Redesigned Macs, Reshaped iPhones, Paving the Way for the Next Decade?

3. MGW: From Rivals to Allies: Apple and Google's New AI Battle

4. International Business Daily: Memory Price Surge Triggers Turmoil in the Consumer Electronics Industry

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