The end of the era of cheap gadgets may be on the horizon – media
Kyiv • UNN
Due to the shortage of AI chips, prices for laptops and smartphones will rise sharply. The budget electronics segment could disappear entirely by 2028.
The end of cheap laptops, budget phones, and affordable gaming consoles may be just around the corner. Not because new models are more high-tech, but because the cost of computer components has skyrocketed, reports The Guardian, according to UNN.
Details
Recently, major laptop and phone manufacturers, including Microsoft, Samsung, and Dell, have begun raising prices and discontinuing cheaper models, which will make finding budget phones and laptops significantly more difficult.
The primary reason is a shortage of memory chips, which the tech press has dubbed "RAMageddon." However, the shortage is caused not by conflict or a lack of materials, but by the development of artificial intelligence (AI) and the data centers that this technology depends on.
Memory chips are crucial for every modern electronic device and are also used in other vital components, such as graphics cards, creating a chain reaction.
Chip shortage threatens 20% price hike for smartphones and computers - FT01.01.26, 09:00 • 8181 view
Analytical firm TrendForce predicts that prices for mass-market laptops, which typically cost around $900, could rise by as much as 40% in 2026 due to the memory chip shortage and the rising cost of other components.
Massive investments in AI have led to a significant expansion of server farms—huge computer complexes equipped with large quantities of high-performance memory chips. This has absorbed both current global stockpiles and production capacity for several years, creating a dramatic memory shortage and driving up the cost of other electronics.
Furthermore, supplies of flash memory chips used in SSDs (solid-state drives) have been limited as manufacturers shifted to producing higher-margin memory chips for AI. Supplies of lower-end processors have also been affected as manufacturers moved to high-performance chip production to meet AI-related demand.
Since margins on cheaper laptops, phones, and other electronics are smaller, they are likely to face the largest price increases. Some analysts say memory accounts for 30% of the cost of a budget smartphone and 23% of the cost of an entry-level laptop, meaning the production of many budget models could become unprofitable.
"This sharp rise in prices deprives manufacturers of the ability to offset costs, making the production of low-margin entry-level laptops unprofitable. Ultimately, we expect the entry-level PC segment priced under $500 to disappear by 2028," said Ranjit Atwal, Senior Research Director at Gartner.
Some electronics manufacturers, anticipating the chip shortage, stockpiled critical components to weather the price hikes. Others have managed rising costs by gradually phasing out lower-spec models, effectively raising the starting price.
For example, Apple increased the starting price of its popular MacBook Air while doubling the minimum memory capacity. Microsoft discontinued budget models of its Surface computers and raised the starting price. Dell, Lenovo, Framework, and other PC manufacturers have also raised prices.
Sony has increased the price of the PS5 since April and is reportedly considering delaying the release of its successor, while Microsoft raised the price of the Xbox last year. Meta also added to the cost of its Quest 3S VR headset on April 19, and Samsung recently raised the price of some smartphone models, such as the S25 Edge with 512GB of memory. Many other smartphone manufacturers have warned of price increases this year.
Data center builders and AI companies have secured deals with suppliers to purchase chips for at least the next few years, with some estimates suggesting that only 60% of demand will be met.
Major memory manufacturers Samsung, SK Hynix, and Micron are increasing production capacity, but most will not begin operations until 2027 at the earliest. SK Hynix expects the current shortage to persist until 2030.