Tech firms are blaming AI for mega device and console price rises

Tech firms are blaming AI for mega device and console price rises - Published For years, buyers of tech could rely on a familiar trend - that older devices would get cheaper over time. That now seems to have stopped, or in some cases, completely reversed. Apple and Microsoft's Xbox have joined the firms hiking prices for devices and games consoles which are years old. They and other tech companies have pointed to the rising cost of crucial components needed to build their machines, laying the blame on AI. Compute-hungry data centres, which power AI, need more and more chips to keep up with demand from AI companies - which means the demand for them is far outstripping supply. Some people have called it "Ramageddon" - as random access memory (Ram), a once-cheap part of any computer, has now shot up in price. But big tech's Ram woes are failing to gain the sympathy of many consumers facing eye-watering costs for barely-new electronics. Apple has raised the prices of its tablets and laptops by nearly 20%. The news was swiftly followed by Microsoft saying it would yet again raise the price of its five-year-old Xbox Series S and X consoles by at least $100 (£75.70). The pricing changes, which will take effect from August, are its third in just over a year - and see the cost of a new console be 30% to 40% more expensive than it was this time last year. "Xbox with another hardware price increase? I gotta laugh to keep from crying," wrote one X user, external reacting to Xbox's console price hikes. "My favorite hobby is cooked." On Reddit, another user responding to the news said Xbox "may as well just cancel" its upcoming console Helix "because no one will be able to afford it". Investors may not have been too overjoyed, either. Apple's share price took a tumble following the announcement of its price bumps on Thursday. Yang Wang, principal analyst at Counterpoint Research, called the memory crisis "the most disruptive supply-side event the smartphone industry has ever faced". The iPhone has so far been shielded from price hikes, and Wang said premium phone makers such as Apple and Samsung were "better positioned to weather the disruption". But Apple was part of a wider sell-off of tech stocks, amid concerns AI investment would impact device sales. And these companies are by no means alone. Nintendo has said it would raise the Switch 2's price globally from September. Valve recently launched its new Steam Machine gaming PC with a higher price than expected, starting its announcement with a long explanation about spiking component costs. It has already raised the cost of its handheld Steam Deck by 40% for similar reasons in May. Why is this happening? The companies blame AI. Apple's announcement on Thursday, which cited an "unprecedented challenge" with memory chips facing the industry, has been seen by several analysts as indicating that the cost of massive AI investment is finally coming to bear. It is no secret that AI developers are seeking to capitalise on excitement about generative AI tech, claiming it can deliver productivity boosts and help firms make more profit. But to do so means building giant data centres filled with racks of powerful servers to enable high-speed processing of heavy AI workloads. They use some of the same raw ingredients needed to make our smaller consumer devices, such as computer chips. Once an affordable component used to build devices, Ram prices more than doubled in price between October 2025 and the start of 2026. "The race to build out AI data centres is resulting in a swift and significant increase in demand that chip makers are rushing to meet," said Danni Hewson, head of financial analysis at investment firm AJ Bell. She said such demand was enabling big chip makers such as TSMC to raise prices "knowing that customers are vying with each other for production capacity". Prices of popular memory kits like DDR4 and its bandwidth-boosting successor the DDR5 have shot up accordingly. According to Counterpoint Research, some 32GB DDR5 components for PCs jumped from $94 in the three months to September 2025 to $127 in the next three months. In the first quarter of 2026, spanning the start January to the end of March, the same components had soared 122% to $282. Since then Dram, which provides a sort of short term memory for devices to facilitate what you do on them in real-time, and Nand flash - long-term memory that stores data even when a device is turned off - have climbed further in price. Can we just blame AI for this? RSM UK's tech senior analyst James Bull noted that the four largest US tech firms are expected to spend hundreds of billions of dollars on data centres and AI equipment in 2026. "That level of demand for memory chips has created a shortage the supply chain cannot keep pace with," he said. With big tech and AI firms buying memory at scale, and able to pay a premium for longer contracts, manufacturers were also being incentivised to prioritise their orders over consumer electronics, Bull added. "Essentially, the MacBook on consumers' desks is now competing for the same Dram as the data centres powering ChatGPT and is losing." Of course, some of the big tech companies, such as Microsoft, have a foot in both camps - investing billions in AI infrastructure while also making consumer products such as the Xbox. But the memory shortage and price rises have also been compounded by inflation and geopolitical issues, say some. When Sony announced further price increases to the PS5 console in the UK and elsewhere around the world, it cited "continued pressures in the global economic landscape". Piers Harding-Rolls of Ampere Analysis said at the time that alongside rising Ram prices, further waves of inflation linked to the war in Iran might have influenced the scale of Sony's price increases. Hewson told the BBC more recent price hikes could "go even higher as chip makers deal with increased costs resulting from the blockade in the Strait of Hormuz". "Whilst the last few days have brought renewed optimism that the situation in the Middle East is being resolved, the impact of the last couple of months means some inflation is now baked in," she added. How the Iran war affects your money and bills - Published16 June 'Corporate greed' However, some have been more cynical about big tech firms reaping billions in annual revenue putting up product prices. Prominent left-wing US senator Bernie Sanders was among those criticising Apple's move on Thursday - writing in a post on X that it amounted to "corporate greed". Apple reported its revenue in the last three months of 2025 rose by 16% compared to the same period the previous year to $144bn (£109bn) - its strongest growth since 2021. But the tech giant is not alone in raising prices, with many analyst firms expecting others will follow suit. Counterpoint's VP of research Neil Shah expects a "constrained supply situation" to last for as long as two years. Not all companies are suffering, though. The AI boom has created a windfall of sorts for some chip makers, including American company Micron, which reported on Wednesday that its quarterly revenue had quadrupled. "Even as we expect industry supply to improve gradually in 2028, we currently do not have line of sight as to when memory supply will be able to catch up with increasing demand," Micron's boss Sanjay Mehrotra told investors on Wednesday, external. In the mean time, gamers and tech fans can expect prices to stay high - or even continue to rise. Sign up for our Tech Decoded newsletter to follow the world's top tech stories and trends. Outside the UK? Sign up here.