New Apple CEO John Ternus is reportedly planning layoffs as he seeks to reshape the iPhone maker.

It’s almost a rite of passage: as soon as a new CEO ascends to the top job, they fire people.

They do this primarily to send a message to the organization to step up its efforts, in part to look good at earnings time. The other reason is to align the company with the new CEO’s ultimate vision for the company, which may differ from that of the previous CEO.

In the case of Apple’s ( AAPL ) new CEO John Ternus, he may just be thinning ranks because it needs to be done, given the new realities facing the tech giant.

Apple stock rose slightly on Wednesday.

Ternus is reportedly planning small-scale layoffs within large teams and canceling plans to slim down the company, according to a Bloomberg report published Wednesday.

“Financial pressure is coming from 2 directions: a memory shortage is increasing component costs and services revenue fell quarter-over-quarter in June for the first time since 2022,” technology expert Rohan Paul said in an X article.

Recall that Apple released conservative revenue forecasts for the current quarter in late July, largely because the company is unable to procure enough memory chips to meet demand. It’s a problem that former CEO Tim Cook expects to persist. Profit margins also came under significant pressure in the latest quarter compared to the previous quarter due to rising memory chip prices.

“On the pricing side, we raised prices reluctantly, I would say,” Cook said during his latest earnings conference call. “We did it because we are in what I would call a 100-year memory price flood, with exponential increases in memory prices.”

The memory chip market has tightened significantly as demand for high-bandwidth memory (HBM) and advanced dynamic random access memory (DRAM) used in AI servers continues to outstrip supply.

Companies such as SK Hynix (SKHY), Samsung Electronics (005930.KS) and Micron (MU) have largely exhausted their premium AI memory capacity through much of 2026 as customers including Nvidia (NVDA), Microsoft (MSFT), Amazon (AMZN) and Meta (META) race to build AI infrastructure.

The shortage has driven up memory prices significantly and given suppliers greater pricing power after several years of industry weakness. Experts expect memory supply to remain constrained until 2027, creating a favorable context for the sector’s largest producers.

The layoffs under Ternus could help offset some of the memory chip pricing pressure that Apple has absorbed. According to Bloomberg, the company wants to avoid larger price increases in 2027 if the shortage of memory chips continues.