The global artificial intelligence boom is hitting Apple’s bottom line in an unexpected way, reportedly forcing the tech giant to scale back production of its base iPhone 17. According to supply chain leaks originating from Weibo, Apple has shifted from an initial 15% reduction to a much steeper plan to suspend roughly one-third of the capacity on several standard iPhone 17 manufacturing lines. This sudden pullback follows a “very serious” internal assessment of how skyrocketing hardware costs are threatening Apple’s legendary profit margins on its entry-level devices. While premium flagships like the Pro models are protected by wider margins, the $799 base model is becoming increasingly difficult to manufacture profitably.
The primary culprit behind this squeeze is the soaring cost of memory and flash storage. With tech giants and neoclouds aggressively bidding up DRAM and NAND flash chips to expand AI data centers, the consumer hardware supply chain is feeling a massive secondary pinch. Contract prices for 12GB mobile memory modules have roughly doubled over the past year, significantly increasing the bill of materials for each device. While Apple has already bumped up prices on Macs and iPads to cope with these “unavoidable” increases, it has so far spared the iPhone. However, with component inflation showing no signs of slowing down, these production cuts suggest Apple is prioritizing its high-margin Pro models rather than taking a financial hit on mass-market units. For consumers, this supply tightening could mean fewer retail discounts on the standard iPhone 17 and an almost certain price hike across the entire next-generation iPhone lineup.