When a new chief executive arrives at a major company, the first moves tend to set the tone for everything that follows. Projects get reviewed. Teams get assessed. The priorities that defined the previous era get quietly retired. Some employees find their roles unchanged. Others do not.
New leadership almost always comes with a period of reorientation. The question is never whether changes will happen, but how fast, how deep, and which parts of the business end up in the crosshairs.
At a company as large and complex as Apple, those decisions carry consequences for tens of thousands of workers and for the products that hundreds of millions of people use every day.
Also read: Apple stock is giving new CEO John Ternus plenty to smile about
Apple is now inside that moment, and the early signals from its new chief executive are becoming harder to ignore.
Why Apple’s new CEO is cutting jobs and canceling projects
John Ternus, who took over as Apple’s chief executive earlier this year, is planning layoffs and project cancellations as he works to reshape the company, according to Bloomberg.
The cuts are expected to affect specific teams within larger divisions rather than represent a broad workforce reduction. Apple has not confirmed the plans or said publicly how far the changes will go.
The moves appear to be driven by both strategic priorities and financial pressure. Ternus seems to be concentrating resources on products and initiatives with stronger growth potential while pulling back from projects that no longer fit that direction.
Layoffs are common when a new CEO takes charge. They can reduce costs, eliminate initiatives that have lost momentum and signal that the new leader intends to operate differently from a predecessor.
Apple has not indicated that it plans a large-scale restructuring. The cuts being reported are described as targeted, affecting particular functions within larger teams rather than sweeping entire divisions. But even targeted reductions send a message internally about what the new leadership values and what it does not.
In Ternus’ case, the timing adds urgency to those signals. Apple is not just managing a leadership transition. It is managing one while dealing with a serious cost problem that has no easy fix.
Michael M. Santiago / Getty Images
How AI demand is making Apple’s chips more expensive
Apple is facing a sharp increase in memory-chip prices, and the source of the pressure is coming from an unexpected direction.
High-bandwidth memory and advanced DRAM have become essential components for AI servers, and companies including Nvidia, Microsoft, Amazon and Meta are building out massive AI infrastructure networks that are absorbing a large portion of the available supply.
SK Hynix, Samsung Electronics and Micron have sold most of their premium AI-memory capacity through 2026, CNBC reported. That has given memory manufacturers unusual pricing power after several years of weak industry conditions.
Analysts expect tight supply to continue into 2027, which creates a favorable environment for chipmakers and a difficult one for device manufacturers. Apple sits squarely in the second group.
The shortage is not something Ternus inherited a solution for. It is a market-wide problem, and Apple is absorbing its effects alongside every other company that depends on memory components to build its products.
What makes Apple’s position harder is that its devices sit at the consumer end of the supply chain, where passing costs along to buyers is possible only up to a point.
Tim Cook called it a ‘100-year flood’
Apple warned investors about the memory situation in July. Former CEO Tim Cook described the pricing environment as a “100-year flood,” with memory costs rising at a pace the company had not anticipated, I previously reported. Cook said Apple could not source enough chips to meet demand.
More Apple:
- Apple rewrites how Americans pay for iPhones
- Bank of America doubles down on Apple stock ahead of earnings
- Apple’s iPhone 18 AI bet hides a pricing trap
The company raised some prices to offset the higher input costs. But there is a ceiling on how far Apple can push pricing. Further increases on iPhones, iPads, and other devices could weaken demand at a time when consumers are already dealing with broader inflation. Ternus now has to find other ways to protect margins, and cutting headcount and canceling projects is one of the tools available to him.
Reducing operating expenses would not solve the memory shortage itself, but it could offset some of the impact without requiring another round of price increases that risks pushing buyers away.
Apple’s most profitable business just posted a rare decline
Apple’s services segment has been one of the company’s most reliable growth engines for several years. It includes the App Store, iCloud, Apple Music and advertising, and it generally produces higher profit margins than hardware. That makes it a critical part of how Apple justifies its valuation to investors.
Services revenue fell quarter over quarter in June for the first time since 2022, according to Apple’s Q3 2026 earnings. A single quarter does not make a trend, but the timing is notable. It came just as the memory shortage was already pressuring hardware margins, leaving Apple dealing with cost problems on one side and softer growth on the other.
The services segment matters to investors in a way that goes beyond its revenue line. It carries higher margins than hardware and has been the main reason Apple’s profitability has held up even during periods when iPhone sales slowed.
A sustained softening there would force a rethink of how the company grows from here. That possibility is part of what appears to be pushing Ternus toward tighter spending discipline across the entire operation.
What Apple’s next earnings will reveal about Ternus
Trimming headcount and canceling projects can improve margins in the near term. The potential benefits are real. Fewer projects competing for engineering resources can sharpen focus.
Lower operating expenses reduce the pressure to raise hardware prices again. And eliminating initiatives that were unlikely to generate meaningful returns frees up capital for higher-priority bets.
But the risks are just as real. Apple could lose experienced engineers who find the uncertainty reason enough to leave. Morale tends to suffer when workers are unsure which direction the company is heading. And if the cuts land on the wrong projects, the company could slow development in areas it will later wish it had protected.
Investors will be tracking gross margins closely over the next few quarters to see whether the moves are working. Services revenue will be another data point, both as a signal of whether June’s dip was temporary and as a read on how Apple’s software and subscription businesses are holding up. iPhone pricing will matter too, given how much the company has already leaned on price increases to manage the memory shock.
Ternus has not said publicly how far the changes will go. The scope and targeting of the workforce reductions will say a great deal about his priorities and where he thinks Apple needs to be heading.
Related: Bank of America warns Apple investors because of Meta’s Muse
