By Stephen Nellis and Akash Sriram
Jan 29 (Reuters) – Apple on Thursday forecast higher-than-expected revenue growth of up to 16% for the March quarter, powered by strong demand for its iPhones and a sharp rebound in China and accelerating demand in India.
That followed holiday-quarter results that beat estimates as well, with CEO Tim Cook telling Reuters that demand for the latest handsets was “staggering.”
Apple’s iPhone 17 lineup helped lift sales across key markets in the company’s fiscal first quarter ended December 27, easing investor concerns about a hardware sales plateau.
Apple shares rose 3.5% in extended trading after the results were released, but later pared gains to trade up 0.8%.
Apple expects revenue for its fiscal second quarter to grow 13% to 16%, versus a 10% rise that analysts expected, according to LSEG. The company also forecast operating expenses of $18.4 billion to $18.7 billion, slightly above spending in the first quarter.
The revenue forecast, however, bakes in some processor supply constraints that are affecting iPhone production, Cook told analysts on a conference call. Taiwan’s TSMC makes Apple’s chips.
“We’re currently constrained. And at this point, it’s difficult to predict when supply and demand will balance,” he said, adding, “we’re seeing less flexibility in supply chain than normal, partly because of our increased demand that I just spoke about.”
Before the call, Cook told Reuters in an interview: “The demand for iPhone was simply staggering, with revenue growing 23% year over year to achieve its biggest quarter in history.” He said on the call that the company gained market share in December.
MEMORY-CHIP CRUNCH TO PRESSURE Q2 MARGINS
Apple forecast gross margin of 48% to 49% in the second quarter. In the first quarter, it posted gross margin of 48.2%, above both its own guidance and analyst expectations of 47.45%, according to LSEG data. The result suggests that rising costs for DRAM memory chips and commodities such as gold have not yet shown up in Apple’s results.
Cook said the memory chip crunch would be “a bit more of an impact” to second-quarter gross margin. “Beyond Q2 … we do continue to see market pricing for memory increasing significantly. As always, we’ll look at a range of options to deal with that.”
A global shortage of memory chips has begun to ripple through the consumer electronics industry. The situation has been worsened by a sharp shift in production priorities toward artificial intelligence, where advanced and high-bandwidth memory used in data centers commands far higher margins.
