Tech Giants Sound Alarm: Soaring Memory Costs Will Trigger Price Hikes Across Consumer Electronics
Your next phone, laptop, or gaming console is about to get more expensive. Tech companies are issuing a stark warning: the bill for the memory inside their devices is skyrocketing, and they won't be swallowing the cost.
The Memory Squeeze
It's a simple, brutal equation of supply and demand. Production hasn't kept pace with the world's voracious appetite for data. Every new AI model, high-resolution game, and 8K video stream demands more high-speed DRAM and storage NAND. The factories can't churn it out fast enough, and when scarcity hits a component this fundamental, prices don't creep—they surge.
Passing the Buck
Manufacturers are drawing a line in the silicon. The era of absorbing cost increases to maintain market share is over. The message to consumers is clear: the premium for that extra memory in your device is coming directly out of your wallet. Expect to see the increases first in flagship products, where margins are already thin and components are top-tier, before the ripple effect hits the entire lineup.
A Cynical Cycle
For Wall Street, this might just look like another quarter of 'inflationary growth'—a convenient narrative where rising prices get rebranded as rising value. Meanwhile, the rest of us will be paying more for the same specs, caught in a squeeze play between chipmakers and device brands. The only memory getting cheaper here is likely your bank account's.
New factories won’t help soon
Building more chip factories would help. But these plants don’t pop up overnight. Micron CEO Sanjay Mehrotra said Wednesday the company will break ground on a new facility in upstate New York early next year. Don’t hold your breath waiting for chips from that plant, though. They won’t roll off the line until 2030.
Micron is spending big to increase production elsewhere. The company plans to drop a record $20 billion this fiscal year on expanding capacity. Over the past five years, they averaged just over $10 billion annually.
Still not enough. Mehrotra doesn’t think even this massive spending spree will satisfy demand for the high-bandwidth memory AI needs. “We believe that the aggregate industry supply will remain substantially short of the demand for the foreseeable future,” he said on the call.
Tech companies sound the alarm
Computer makers see what’s coming. Jeff Clarke, Dell’s Chief Operating Officer, addressed the situation last month. “We’re going to do everything we can to minimize the impact,” he said. “But the fact is the cost basis is going up across all products.”
HP issued its own warning last month. Rising memory costs could push operating profits to the low end of their long-term range for the current fiscal year, executives told investors.
So consumers will pay the price? Well, Someone has to pay for all this.
The smartphone industry already sees trouble ahead. Counterpoint Research changed its forecast earlier this week. The firm now expects smartphone sales to drop 2.1% next year. They had previously predicted a slight increase. High-end phones with AI features are in a particularly tough spot since they need more memory.
Even video games are caught up in this mess. Nintendo’s stock has dropped 18% over the past month. Doug Creutz, an analyst at TD Cowen, says worries about memory prices are mostly to blame. He ran the numbers. If memory costs add $40 to each Switch 2 console, it would slash about 20% off his pretax earnings forecast for Nintendo’s fiscal year ending March 2027.
His guess? Nintendo might raise the Switch 2 price by $50 instead to cover the cost.
Mario fans won’t be happy about that. But for Micron, basic economics is working in its favor. Supply and demand are pushing the company toward record profits.
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