Apple released its fiscal year 2026 third-quarter financial results, with CEO Tim Cook attending the analyst call for the last time as the company's leader. He stated that the handover to incoming CEO John Tornetta is "proceeding smoothly," and Tornetta will officially take over on September 1. At this farewell meeting, several signals from Cook are worth noting.
Supply Chain in Crisis, Cook Rarely Names Memory and TSMC
The report shows that Apple's total revenue for the third fiscal quarter was $109.417 billion, an increase of 16% year-over-year, with a net profit of $29.789 billion, up 27% year-over-year. However, both the service business and China region revenue fell short of expectations, causing the stock to drop 8% after hours. The guidance for revenue growth in the fourth fiscal quarter is between 9% and 11%, also below analysts' expectations of over 12%, with the main cause being supply chain shortages.
Cook admitted that the flexibility of the supply chain has fallen below normal levels, and the impact on iPhones, Macs, and iPads will significantly increase compared to the previous quarter. The main bottleneck lies in the production of advanced chips, implying that TSMC has not provided enough wafers. More notably, Cook's comments on the memory supply issue were particularly attention-grabbing—he said it would be better if there were more than three memory suppliers, and Apple is evaluating all options, which is widely interpreted as opening the door to Chinese memory manufacturers. Cook described the current memory price situation as a "once-in-a-century flood," forcing Apple to raise prices.
AI Launch Approved in China, 150 Million Paid Users as a Foundation
In terms of AI development, Cook revealed that developers and beta testers have given "very enthusiastic" feedback on the Siri AI features. Apple has been approved to launch its first Apple Intelligence functions in China, and the company is currently working on implementation. However, fully introducing Siri AI to the Chinese market still requires more work. Cook also announced that Apple's paid subscription users have surpassed 1.5 billion, providing a large base of paying users for AI feature distribution.
At his final opportunity to address analysts as CEO, Cook also highlighted that the Mac business set a historical record in emerging markets, especially in China. For this outgoing leader, the underlying challenges in the supply chain and the breakthrough of AI in the Chinese market may be the most significant and challenging "assignment" he leaves for his successor.
