Chip shortage threatens 20% price hike for smartphones and computers - FT

Consumers should prepare for price increases this year on smartphones, computers, and home appliances by as much as 20 percent, analysts and manufacturers warn, as demand for artificial intelligence drives up the cost of memory chips used in electronics, writes UNN with reference to the Financial Times.

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Consumer electronics manufacturers, including Dell, Lenovo, Raspberry Pi, and Xiaomi, warn that chip shortages are likely to exacerbate cost pressures and force them to raise prices, with analysts forecasting increases of 5-20 percent.

Dell's chief operating officer, Jeff Clarke, said during an earnings call in November that the company had never seen "such a pace of cost growth," and that this would inevitably affect consumers.

British PC maker Raspberry Pi called cost pressures "painful" and raised computer prices in December, while Lenovo, the world's largest PC maker, is stockpiling memory chips and other critical components, CFO Winston Cheng told Bloomberg TV in November. Analysts note that the global expansion of data centers to power AI models has led to a surge in demand for advanced high-speed memory chips, causing chipmakers to pay less attention to cheaper semiconductors used in consumer electronics.

This has created a shortage of dynamic random-access memory (DRAM) chips, which are used in everything from cars to computers to temporarily store data. As a result, companies are stockpiling chips, leading to rising semiconductor prices.

"We are already seeing widespread supply shortages," said Daniel Kim, an analyst at Macquarie. "The market has gone crazy, buyers are panicking, trying to secure enough memory, no matter how much they are willing to pay for it."

Market researcher TrendForce predicts that average DRAM prices, including HBM chips, will increase by 50-55 percent in the fourth quarter of 2025, compared to the previous quarter.

Samsung and SK Hynix, the world's two largest memory chip manufacturers, controlling 70% of the DRAM market, said that orders for 2026 have already exceeded production capacity. Last month, Samsung raised prices for some memory chips by 60%.

"Demand for AI-related servers continues to grow, and this demand significantly exceeds the industry's supply," said Kim Jae-joon, head of Samsung, during a financial year earnings call in October.

Ultimately, consumers may pay the price. Kim from Macquarie predicts a 10-20% increase in electronics prices in 2026, while Chung Chung, head of Asia-Pacific equity research at Nomura, expects a 5% increase, given that companies may look for ways to save in other areas.

According to Greg Roe, an analyst at Hyundai Motor Securities, consumer electronics manufacturers have been forced to accept higher prices as cloud service providers such as Amazon and Google have entered into long-term agreements with chipmakers to secure DRAM supplies for servers. Morgan Stanley predicts that major US tech companies will spend $620 billion on AI infrastructure in 2026, an increase of $470 billion from 2025. Morgan Stanley predicts that total global spending on AI data centers and related equipment will reach $2.9 trillion by 2028.

"Demand for computing power in AI data centers is much higher than expected, which is also depleting chip inventories for PCs and smartphones," said Peter Lee, an analyst at Citigroup. "Supply will remain constrained until 2027, and no additional capacity is expected. Chip stockpiling in 2026 will be even worse."

Lu Weibing, president of Chinese smartphone maker Xiaomi, which raised the price of its flagship product in October, said in November that he expects supply chain pressures in 2026 to be "much stronger" than in 2025.

Kim from Macquarie warned that the worst-case scenario would involve "severe supply chain disruptions seen during the pandemic." In November, Samsung announced plans to launch a chip production line at its plant in South Korea, and SK Hynix is building a $91 billion chip production cluster, which was announced in 2024.

"We are carefully considering how to meet all demand," said SK Chairman Chey Tae-won at a company event in November.

However, new capacity is not expected to come online anytime soon.

"We are trying to increase supply, but it takes at least two to three years to build a chip manufacturing plant," said an industry representative in Seoul.

Meanwhile, companies will have to "either raise product prices or sacrifice margins," said Lee from Citi.

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