If you’ve been putting off upgrading your smartphone or laptop, you will want to understand the impact on pricing due to a combination of recent issues — artificial intelligence, trade policy, and memory chip shortages — issues that are pushing many consumer tech product prices higher. Prices will go up on some electronic products but its impact will vary.
Analysts are calling this RAMageddon, the sudden demand for memory chips. AI data centers being built by Google, Microsoft, Amazon, OpenAI, and others are using hige amounts of memory chips — specifically two kinds, DRAM and NAND — at a historically unprecedented rate. These are the same chips used inside our phones and laptops.
DRAM (dynamic random-access memory) is short-term working memory — it’s what allows your phone to run multiple apps simultaneously and your laptop to switch between windos and applications without slowing down. Data is constantly flowing in and out of this type of memory. The cheaper NAND flash memory is used for static storage for files such as photos, apps, documents, and the operating system.
Both are produced by a limited number of manufacturers — primarily Samsung, SK Hynix, and Micron that account for 90% of the supply. AI server demand has caused their cost to rise 50% over just 3 months ago.
As a result, Counterpoint Research estimates the average smartphone selling price will rise nearly 7% this year or about $40. Budget phones and notebook computers in the $200-$300 range will experience the sharpest rise because the memory chips represent a much larger share of the total cost of components than it does in a, say, $1,200 product. Premium devices from Apple and Samsung may be better insulated against a rise due to their long-term supply contracts and the ability to spread component costs across higher cost products.
But not so much the lower cost products. My friend Joe Brancatelli bought a $300 14-inch PC notebook several months ago on Amazon. It was one of the numerous “no-name” brands available directly from Chinese companies. Amazingly, it came with 32GB memory and 1TB of NAND. Joe noted that It now costs $360, most likely due to the increase in memory cost..
With the increasing costs of memory, it was interesting timing to see Apple introduce their lowest cost MacBook Neo ever for just $599 list price and $499 with an educational discount. While I’ve not tried one yet, the reviews have been stellar. The quality of the screen, keyboard and aluminum housing, and particularly its processor, are a cut above their Windows’ competitors. But the $599 model comes with only 8GB memory so many will upgrade to the model with twice the memory for $100 more.
Manufacturers typically are paying $25–45 per 8GB chip at current spot prices, up sharply from about $7–8 just a year ago. Apple is likely insulated from some of this increase with their long term contracts. But even if not, Apple can easily absorb the increase in cost. In the past, Apple has made near obscene margins on memory upgrades to their products, typically charging us $100 for a memory bump that cost them under $10. They should be able to keep their retail prices steady- assuming they want to.
Tariffs on electronics manufactured in Asia are another unknown. Currently they add another 10 to 15 percent to retail prices -depending on the whim of our government.
Electronic shortages are nothing new. When they do occur new manufacturing usually becomes available a couple of years later as manufacturers ramp up to meet demand.
In the meantime, upgrade now if you are planning to buy a lower cost phone or notebook. With regards to iPhones, there isn’t any urgent reason, especially considering the free phone deals being offered by the carriers. If you play the game carefully, you can get free phones by switching carriers, or sometimes even threatening to do so. That has much more impact than the added cost of memory.
