CUPERTINO, California: Apple warned that soaring memory chip prices will put further pressure on its profit margins, sending its shares down about 4 percent on November 3 as the AI-driven scramble for chips increasingly spills over into consumer electronics.

The results were Apple's first under new CEO John Ternus and showed that even the iPhone maker, long known for its supply-chain strength, is feeling the effects of rising memory costs.

Sales of smartphones, PCs and other electronics have already been affected this year by price increases as the AI industry's data-center expansion absorbs memory chip supplies.

"What we're seeing with memory pricing right now is unprecedented," Ternus said on his first earnings call as CEO.

"For the December quarter, we expect even higher memory costs. And looking beyond the December quarter, we see the pricing for memory purchases continuing to increase."

Apple's gross margin, the share of revenue it retains after production costs, slipped to 47.9 percent in the September quarter from the June quarter, despite a boost from tariff refunds.

The company expects gross margin to decline further to between 45 percent and 46 percent in the December quarter as it also faces the costs of rolling out an AI-powered Siri that is central to its artificial intelligence plans.

Apple has been drawing on memory chips purchased earlier at lower prices and moving to secure supplies. Its manufacturing purchase obligations, covering orders placed with suppliers and contract manufacturers, rose by US$33 billion to $89.7 billion as of September 26, according to a filing.

The company's shares had gained more than a fifth this year ahead of the results, as Apple's relatively restrained AI spending made it attractive to investors concerned about the rising cost of the industry's AI expansion.

The decline on November 3 also weighed on the S&P 500 and Nasdaq.

The memory crunch comes as Ternus oversees a product push that includes Apple's first foldable phone, the iPhone Duo, and its first touchscreen MacBooks.

Apple has also been raising prices to cushion the impact on profitability. Higher prices, together with strong demand for its premium iPhone 18 Pro lineup, helped the company beat fourth-quarter sales estimates and issue an upbeat revenue forecast.

But analysts warned that further price increases could deter consumers as inflation rises.

The CEO comments imply "Apple products are going to become even more expensive, which is not ideal at a time when the consumer is feeling the pinch from a higher cost of living," said Dan Coatsworth, head of markets at AJ Bell.

Apple could lose more than $170 billion in market value from its $4.94 trillion valuation if Tuesday's losses hold.

The stock trades at nearly 35 times expected earnings over the next 12 months, compared with 18.23 times for Alphabet and 23.43 times for Microsoft.