Is the Age of Budget Smartphones and Laptops Coming to an End?

The era of inexpensive laptops, bargain smartphones and affordable gaming consoles could be ending. The reason is not newer, more advanced models but a surge in the price of computer components.

Major laptop and phone makers such as Microsoft, Samsung and Dell have begun raising prices and dropping their cheapest models, making it harder to find devices under £400.

The driver is a shortage of memory chips, labelled “RAMageddon” by the tech press. The shortage stems not from conflict or raw‑material scarcity but from the explosion of artificial intelligence and the data centres that power it.

Memory chips are essential to virtually every modern electronic device and also appear in graphics cards, creating a ripple effect.

TrendForce, an analyst firm, projects that mainstream laptops that now sell for about $900 (£667) could see price jumps of up to 40% by 2026 because of the memory‑chip crunch and higher costs for other parts.

Massive AI investment has spurred the growth of server farms—vast arrays of computers packed with high‑end memory chips—consuming both today’s supply and future production capacity for several years, tightening memory availability and pushing up the cost of other electronics.

Adding to the problem, the supply of flash storage chips used in SSDs has tightened as manufacturers shift to higher‑margin memory chips for AI. Likewise, the output of low‑end processors has fallen as factories prioritize high‑end chips to satisfy AI‑related demand.

Because profit margins on cheap laptops, phones and similar gadgets are thin, they are likely to bear the steepest price hikes. Some analysts note that memory makes up roughly 30% of a budget smartphone’s cost and 23% of an entry‑level laptop’s cost, meaning many low‑priced models may become uneconomical to produce.

“This sharp rise erodes vendors’ ability to absorb costs, rendering low‑margin entry‑level laptops non‑viable. We therefore expect the sub‑$500 (£370) PC segment to vanish by 2028,” said Ranjit Atwal, senior director analyst at Gartner.

Rising prices

Some manufacturers anticipated the chip shortage and stockpiled key components to buffer price increases. Others have dealt with rising costs by discontinuing lower‑spec models, effectively raising the entry price.

Apple, for example, lifted the starting price of its popular MacBook Air by £100 while doubling the base storage. Microsoft removed lower‑end Surface configurations and added £170‑£200 to the starting price, depending on the model. Dell, Lenovo, Framework and other PC makers have also raised their prices.