Apple is launching a new device leasing program called “Apple Upgrade” in the United States on July 28 to encourage more people to buy its products, according to Bloomberg News, citing people with knowledge of the matter.
Market Context
The new program comes at a time when Apple is facing rising costs for memory and storage chips because of the global AI boom. AI companies are building more data centres, creating huge demand for memory and storage chips, which has pushed prices much higher. Apple has already increased prices of products like iPads and MacBooks, but until now it had avoided raising iPhone prices.
Analysts believe Apple is betting that many premium iPhone buyers will continue upgrading despite higher prices. The company is also introducing the Apple Upgrade leasing programme with lower monthly payments, making expensive devices feel more affordable. Some analysts expect strong demand from loyal Apple users, while others say the higher prices could encourage more buyers to keep older iPhones for longer.
Cook said the biggest concern is the DRAM market, where more supplies are now being sent to AI servers instead of consumer electronics. Cook said, “There’s less supply at a time when consumers want devices and the memory guys are passing along huge price increases”, Tim Cook told The Wall Street Journal. He also said, “We definitely need memory pricing and supply to return to reasonable levels for consumer products. That’s the bottom line.”
Cook further added, “Obviously, more capacity is needed.” However, Cook clarified that Apple does not plan to build its own memory or storage chip factories, despite being willing to invest in solving supply issues. Cook also confirmed that he will hand over leadership of Apple to John Ternus in September.
Company Performance
Apple CEO Tim Cook has now said that the company can no longer fully protect customers from these rising costs. Cook said, “Unfortunately, price increases are unavoidable.” He added, “We’re doing our best to mitigate the huge increases that are being passed to us, and we’ve been trying to shield our customers from the increases, but the situation has become unsustainable”, according to his interview with The Wall Street Journal.
Apple is partnering with Klarna Group as the financial backer for the leasing program. Customers will be able to sign up for the program both online and at Apple retail stores. Apple plans to advertise the new service as offering lower monthly payments than its existing financing plans. To make room for the new service, Apple plans to stop accepting new users into its current financing options, including the iPhone Upgrade Program and its standard financing plans.
Future Forecast
Analysts expect Apple’s September event to focus mainly on the iPhone 18 Pro models and the company’s first foldable iPhone. Because of that, WSJ says this is not a good time to buy an iPhone Pro, since a new version is expected soon.
Francisco Jeronimo said the iPhone 18 Pro could start about $200 more expensive than last year’s model, according to WSJ. The estimate matches its own calculations based on projections from research firm TechInsights.
Francisco Jeronimo estimates Apple’s first foldable iPhone could cost around $2,500, according to WSJ. The foldable phone is expected to have a normal outer display and open like a book into a larger screen, similar to Samsung Galaxy Fold and Google Pixel Fold devices.
Apple is also reportedly preparing to launch its first foldable iPhone, along with the iPhone 18 Pro and iPhone 18 Pro Max, in September, according to Reuters. The combination of expected product price increases and the launch of the new Apple Upgrade leasing service suggests Apple is trying to keep its premium devices affordable through lower monthly payments even as manufacturing costs continue to rise.
Source
Although Cook confirmed price increases are coming, he did not reveal when the increases will happen, how much prices will go up, or which Apple products will become more expensive, according to The Wall Street Journal interview.
Buyers looking for a new iPhone now have several choices, including the basic iPhone, the “e” series, the Pro models, the Air model and the upcoming foldable model. Francisco Jeronimo, Vice President of Client Devices at IDC, said Apple may delay the launch of the next-generation base iPhone and iPhone Air until spring 2027, according to WSJ. Jeronimo said those lower-priced models could also become $100 more expensive.
Lexuan Chiew, Research Manager at Omdia, said launching devices at different times would help Apple spread out manufacturing and memory chip demand throughout the year. Bob O’Brien, Director at Counterpoint Research, believes Apple could continue selling the iPhone 17 at its current starting price of $799, even after launching the more expensive iPhone 18, according to WSJ. Buyers who do not need premium features can safely buy the iPhone 17 or the more affordable iPhone 17e instead of waiting.
A $200 price increase could push the iPhone 18 Pro Max close to the $1,500 mark, making it Apple’s biggest iPhone price jump yet, based on WSJ’s analysis and analyst estimates. For buyers who want Pro-level cameras and battery life but do not want to pay higher prices, older refurbished iPhone Pro models could be a better option, according to WSJ. The most Apple Intelligence features already work on the iPhone 15 Pro and iPhone 16 Pro, but the most advanced upcoming on-device AI features will require at least an iPhone 17 Pro.
Also read: Americans switch to Chinese AI as cheaper models challenge ChatGPT and Claude despite Trump crackdown
The new Apple Upgrade program is designed to make buying Apple devices easier through monthly subscription-style payments. Customers will be able to pay off a device early, upgrade to a newer model before their contract ends, or keep the device after the leasing period finishes, according to Bloomberg News. The leasing service will support most iPhone, Mac, iPad and Apple Watch models.
Unlike Apple’s current iPhone Upgrade Program, the new Apple Upgrade subscription will not include AppleCare, according to Bloomberg News. Some Apple products will not qualify for the leasing program. These include the Apple Watch SE, entry-level iPad, iPhone 16 and MacBook Neo. The leasing program also will not be available for business or education purchases. Reuters contacted both Apple and Klarna for comment, but neither company immediately responded. Apple’s pricing challenge is mainly being driven by a shortage of memory and storage chips.
Earlier this month, groups representing automakers, retailers, electronics companies and other industries warned that rising memory chip prices could make many consumer products in the U.S. more expensive and disrupt supply chains, according to Reuters. Cook said Apple is open to looking at more supply sources for memory chips, including those in China, despite U.S. national security restrictions.
When asked whether restrictions should be eased, Cook said, “Everything needs to be on the table”. He added, “I think we should look at all supply.” Cook also said Apple is ready to use its strong cash reserves to help increase global memory chip supply if needed, according to The Wall Street Journal interview. He said, “We’re willing to use our balance sheet to help be a part of the solution.”
