Apple partners with Klarna on a lease-to-own device program

Apple is reportedly teaming up with deferred-payment processor Klarna to launch a new lease-to-own program for its devices. Bloomberg reported Tuesday that the program — dubbed Apple Upgrade — is set to launch next Tuesday, July 28. It will allow consumers to pay for their purchases over multi-year periods, including iPhones, iPads, Macs, and Apple Watches.

Bloomberg writes that the lease term for iPhones and Apple Watches will be up to 24 months, while leases for Macs and iPads will be up to 36 months. The devices can either be kept or returned at the end of the leasing period, and upgrades to new devices will also be available — hence the program’s name. The report notes vaguely that, in some cases, “transactions will incur an additional fee.”

Apple already runs a similar program called iPhone Upgrade, though the company reportedly plans to stop allowing new customer sign-ups to that program in favor of the broader Apple Upgrade. A leasing program is an obvious strategy for Apple at this point: the iPhone maker has been battling supply-chain issues wrought by “RAMageddon” — the industry-wide shortage of memory chips that is driving up the price of hardware. Those shortages have been driven largely by the AI industry, which is absorbing so much memory that it’s leaving little for the rest of the market.

To deal with these issues, Apple recently announced it would raise prices, and Upgrade appears designed to make those higher prices more palatable to consumers. TechCrunch reached out to Apple and Klarna for more information. The move comes as Apple navigates a hectic transitional period: new CEO John Ternus has just taken the reins, and the company has also entered a legal battle with AI startup OpenAI, suing it over alleged trade-secret theft.

Why it matters

A financing partnership that softens the blow of Apple’s price hikes signals how central the memory-chip shortage has become to its device strategy, and it lands at a moment when the company is also managing a leadership transition and a high-stakes legal fight with OpenAI.