Apple cuts iPhone 18 Pro orders as AI raises the bill Faizan Farooque, Robert Davey Mon, October 12, 2026 at 2:17 PM EDT 7 min read AAPL +1.00% Trade Apple on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
The price of a new phone is one area where consumers may finally be directly affected by the artificial intelligence boom.
Apple (AAPL) has reportedly told suppliers to cut October component orders for the iPhone 18 Pro and iPhone 18 Pro Max by at least 15% from earlier plans, after demand for the new premium models came in softer than expected, Nikkei Asia reported, according to Reuters. Some suppliers have seen reductions of 15% to 20%.
Normally, it would seem like just another narrative about an iPhone cycle. The wrinkle on this one is more peculiar.
Artificial intelligence data centers are using massive amounts of memory chips, restricting supply and raising prices for consumer products. In response, Apple increased the beginning prices of the iPhone 18 Pro and Pro Max by $100, making them $1,199 and $1,299, respectively. On its product site, Apple verifies those prices.
This creates a difficult situation for the tech sector: while AI is intended to encourage people to update their phones, the infrastructure supporting it is also driving up the cost of those phones.
The challenge for Apple investors is whether customers believe the extra features are worth the price difference.
Apple offered consumers several reasons to think about purchasing the iPhone 18 Pro.
The phone has a new variable-aperture camera, enhanced battery life, a revamped cooling system, Apple Intelligence and Siri AI, and the A20 Pro CPU. According to Apple, the Pro versions represent significant improvements in intelligence, battery life, and camera capability.
However, buyers of new phones don't only purchase specs. They perceive a cost.
The Pro Max starts at $1,299, while the iPhone 18 Pro is currently priced at $1,199. That increase could seem reasonable on a monthly basis to someone who is financing a phone over a two-year period. $100 might make waiting another year seem preferable to someone who already has an iPhone and is comparing it to the next model.
I've seen enough iPhone cycles to realize that people seldom raise the subject of whether Apple's latest phone is superior. It's almost always the case. Whether the improvement is significant enough to convince millions of consumers who currently possess flawlessly working phones to upgrade is the more difficult issue for the stock.
This year, the industry's cost structure is shifting against Apple, making the pricing more significant.
TrendForce said in September that AI servers continue to crowd out dynamic random-access memory, or DRAM, capacity, contributing to shortages and price increases that could continue into 2027. The research firm expects higher component costs to pressure smartphone production and demand.
TrendForce's February estimate shows that a popular smartphone memory configuration's contract price has almost quadrupled since last year. TrendForce predicts a 10% drop in global smartphone manufacturing in 2026; high prices could worsen the situation.
Apple may have a lot of buying power, but it can't totally avoid a shortage in the business.
The peculiar aspect of Apple's issue is that the same technological progress that has contributed to some of the largest stock market gains in history is simultaneously driving up the cost of common devices.
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To transfer data fast, large AI systems need enormous amounts of memory. Phone manufacturers battle for a smaller pool of components as chipmakers invest more in high-value servers and AI infrastructure.
Samsung Electronics has already raised prices on its Galaxy S26 lineup as higher memory costs squeezed its smartphone business, Reuters reported.
Samsung best shows the strange economics. As AI demand rises, the world's largest memory producer has benefited. However, component prices hurt its smartphone business. As component costs rose, Samsung's mobile business lost more than $1 billion in the third quarter, Reuters reported, even as the company projected huge profits from memory demand.
The difference between smartphones and AI servers is hardly noticeable to users. The outcome is more straightforward: a greater price at the Apple Store may ultimately arise from the chip explosion.
Because of this, Apple's alleged manufacturing decrease is worth keeping an eye on for more than just one model.
Smartphone manufacturers may have to decide whether to absorb more of the component inflation themselves or pass it on to customers and run the risk of decreased demand if premium purchasers begin to oppose price increases.
There are other reasons than just price for why Pro demand may be weaker.
Apple has altered the iPhone launch schedule, making this year's purchase choice exceptionally difficult.
Its first foldable phone, the iPhone Duo, becomes available Oct. 23. Apple priced the device at $1,999 and gave it a 7.6-inch inner display, a smaller outer screen, and the same A20 Pro chip family used in its premium phones.
This generates a new kind of customer that Apple has never had to take into consideration with a typical Pro launch.
After looking at the 18 Pro Max, someone who is willing to spend far more than $1,000 on an iPhone could opt to wait a few weeks to view the Duo in person. Another customer could hold out until later in Apple's staggered release cycle for more affordable iPhone 18 versions.
Barron's observed that Apple's upcoming Duo and more affordable variants may affect demand for the Pro phones. While Evercore ISI analyst Amit Daryanani warned that component-order modifications may not always convert immediately into consumer demand, UBS analyst David Vogt also noted decreased wait times for shipments as a signal to watch.
Although supply-chain details are helpful, Apple may alter orders for a variety of reasons. Component purchases may be impacted by inventory levels, manufacturing efficiency, product mix, and model changes.
Therefore, a stated 15% order drop should not be interpreted by investors as evidence of a 15% decline in iPhone demand.
It does, however, provide more evidence that suggests Apple is facing a more challenging price issue than normal going into the Christmas season.
Apple's financial narrative continues to revolve around the iPhone.
Therefore, whether the component order changes after a month is not the crucial point. The question is whether customers will keep paying more as Apple's expenses increase.
The availability of the iPhone 18 Pro comes first. Faster delivery during the Christmas season would provide further proof that supply is meeting demand.
The iPhone Duo comes second. The $1,999 foldable would either drive some of Apple's most ardent consumers away from the Pro Max or establish a worthwhile new premium category.
The majority of consumer electronics firms would be envious of Apple's previous pricing prowess. Despite their complaints, many continue to purchase pricey iPhones. Because of this, any indication that a $100 rise is altering consumer behavior is very significant.
Lastly, investors should keep an eye on memory expenses.
This is the point at which the iPhone tale immediately relates to the larger AI explosion. Apple may have to continue choosing how much of the extra expenses it absorbs and how much it charges consumers if data-center demand maintains memory prices high until 2027.
Apple has been working for years to convince consumers to purchase its newest products because of artificial intelligence. However, the expansion of AI infrastructure is also driving up the cost of certain of the gadgets' internal parts.
This does not imply that Apple's iPhone business is suddenly in jeopardy. That conclusion cannot be supported by a reported component reduction.
However, it does provide a very mainstream test for the age of artificial intelligence.
The fact that a data center someplace requires extra RAM is unimportant to consumers. They are concerned that the phone they are holding is still functional, even if the new one costs $1,199.
Apple now has to persuade them that the upgrade is worthwhile.
Related: Apple's new CEO plans to send shocking memo to Apple employees
This story was originally published by TheStreet on Oct 12, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.
