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.
Read next
Jaguar Land Rover suppliers voice ‘everything is against us’ amid cutbacks
David Roberts, chair of Coventry-based Evtec, says the outlook for Britain’s automotive sector is grim, with “everything against us.” Evtec is a tier 1 supplier to Jaguar Land Rover, which this week announced 4,000 job cuts over two years despite chancellor John Healey’s attempt to talk
Europe’s fighter jet plans in disarray: what comes next?
When former ECB president and Italian PM Mario Draghi urged Europe to catch up economically with the US and China, defence collaboration was prescribed. No more should each nation build independent boats, tanks or jets; allies should share costs and technologies.
Europe stumbled at the first hurdle. German Chancellor Friedrich
John Healey supports growth but insists Labour must be truthful about spending
John Healey has stated that his primary goal as chancellor will be to boost economic growth, while acknowledging that Labour must be straightforward about controlling public spending at next month's budget.
In his first major address since assuming the role in July, Healey said the leading focus of