Rising memory chip costs are putting pressure on electronics vendors

As the global artificial intelligence race accelerates, memory chips are becoming increasingly expensive. As a result, the cost of some consumer electronics is starting to rise for retailers and consumers alike.

Memory storage, known as RAM, is essential for all computing devices, including phones, tablets and laptops. Chip costs have been rising due to resource shortages driven mainly by high demand for AI data centers. Companies like Nvidia, Advanced Micro Devices again Google they have been trying to protect the RAM of their chips.

an apple On Thursday it announced that it would raise its prices on MacBooks and iPads – passing on the rising cost of memory to consumers – with more price hikes likely down the road. The memory shortage is “an unprecedented challenge,” the company said in a statement.

Incoming Best Buy CEO Jason Bonfig said in a call with reporters earlier this month that the company expects its computer division to be hit hard by the price hike.

“We’ve seen more price increases in Q1, so moving into Q2, we expect [average sale prices] expansion and units from an expansion perspective will be affected,” said Bonfig. “We brought in more inventory in Q1, which you can see on our balance sheet, which helps us reduce.”

Rising memory costs are expected to reduce global PC shipments by 10.4% and smartphone shipments by 8.4% by 2026, according to Ranjit Atwal, senior managing analyst at Gartner, citing a February study. Gartner also indicated that PC prices will increase by 17% and smartphone prices will increase by 13%, compared to 2025 levels.

“What’s happening this time, compared to previous times when memory prices have gone up, is the rate at which memory prices are going up,” Atwal said. “The second is the length of time we think prices will stay high. … This one looks like we won’t get to the end of 2027 before we get to any kind of regional prices.”

Although the price increase may not be immediately visible in stores, Atwal said, it is inevitable that demand will outstrip supply. Some retailers pulled inventory in the first quarter in anticipation of higher prices, he added, but that cushion can only last so long.

“It will happen to everyone,” he said. “You end up in a situation where you can’t control what you can do. You have to pass it on, and that’s the difference now from where we were before. The market is more mature, so there’s an expectation that people will buy anyway.”

Consumers may not even be aware of the price hike, Atwal said. Many people upgrade their laptops after four or five years and may not even remember what they paid before or what the specifications were for their older models, he said.

That gap may lead to a somewhat “delayed effect” on consumer behavior, Atwal said, but the effect will come sooner rather than later.

So far, Bonfig said, Best Buy isn’t seeing any indication that consumers are pushing back purchases or that rising memory costs are affecting their budgets.

“What we are doing with that customer is to talk about what they are changing, talk about their needs and talk about how we can introduce them to technology that will be much better in many different ways,” said Bonfig. “That’s what we’re really going to focus on, making sure we have that breadth and diversity.”

A spokesperson for Best Buy told CNBC that the company is still seeing its customers spend money and that very few are concerned about the recall. In the first quarter, Best Buy said it saw its ninth consecutive quarter of good comparable computer sales.

Anthony Chukumba, a Loop Capital analyst who covers Best Buy, told CNBC that he thinks big retailers like Best Buy will fare better than smaller ones, because of the market share they have. As suppliers pass on the additional costs, Chukumba said large retailers will have more “power” to avoid price increases for as long as possible.

“A lot of times, investors think about things very simply, like, ‘Oh, the cost of memory increases because of AI, that must be bad for Best Buy,'” Chukumba said. “There’s nothing Best Buy can do about it. … This is their business, they’re always in control of these changes, and they see the same things that you see, maybe before you see them, and in more detail, and so they manage it.”

Chukumba said he believes that the long-term impact of memory costs will not be as great as it may seem now.

“Because the technology is always changing, it’s always cheaper, you can have this increase in memory prices, but if you buy something that matches what you would have bought last year, at least two years ago, it will still be very powerful, and consumers are not very smart,” he said.

It may also beat other sellers, such as The target, Amazon, Costco again Walmart. Target declined to comment on the increased memory costs, and Amazon also declined to comment. Costco and Walmart did not respond to requests for comment.

However, the wider risks caused by memory chip shortages may spell trouble.

According to Atwal, a Gartner analyst, rising costs can lead to consumers holding on to their devices for longer, leading to significant changes in the development cycles of products such as smartphones.

“Consumers … will compromise on what they need, and retailers will find it very difficult to push AI features, which depend on this, and often demand payment for them,” Atwal said.

Earlier this month, a coalition of organizations including the National Retail Federation wrote to the US Treasury and Commerce departments asking the government to examine the “urgent imbalance” of memory chips and the potential for “near-term price increases” for consumers.

“The real impact of these practices has begun to show itself and threatens to deteriorate quickly if the situation is not corrected,” said the letter.

The organizations urged the government to work with memory makers and chip buyers to “protect consumers, workers and businesses of all sizes from harm.”

Jon Gold, NRF’s vice president of supply chain and commodity policy, told CNBC that the trend could lead to a shortage of consumer electronics, in addition to possible price increases.

“There’s always a big impact that retailers can’t take on themselves, so they should work with their retailers as much as they can to try to minimize price increases and the impact it has on consumers,” said Gold. “But the biggest impact is the lack of those memory chips is the lack of potential products.”

Gold said that if consumers start holding on to devices for longer due to price increases and development cost differences, it will affect retailers and suppliers as the consumer electronics market stagnates.

“Unfortunately, it’s another very difficult thing for the seller and others who make long-term plans and make contracts six, nine, 12 months in advance,” said Gold. “It’s more complex and more complex and more pressure on retailers and manufacturers.”