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

Tech firms are blaming AI for mega – For years, consumers could count on a predictable pattern: older tech devices would gradually become more affordable as newer models emerged. However, this trend appears to be reversing, with some companies even hiking prices on hardware that’s been on the market for years. Apple and Microsoft’s Xbox Series S and X consoles are among the latest to join the list of tech firms raising costs, attributing the surge to the growing demand for components driven by advancements in artificial intelligence. This shift has sparked concerns about affordability, as the price of even slightly used electronics now seems to be climbing rather than dropping.

The Shift in Demand and Supply Chains

The surge in demand for computer chips, a core ingredient in all modern tech devices, has created a ripple effect across the industry. AI’s insatiable appetite for computational power has led to the construction of massive data centres, which require thousands of high-performance chips to process complex tasks. As these data centres expand, the demand for chips has skyrocketed, outpacing the ability of manufacturers to keep up. This imbalance has driven up the cost of essential components, with some parts—like random access memory (RAM)—experiencing a dramatic price increase.

RAM, once a budget-friendly component, has seen prices more than double between October 2025 and early 2026. This has forced tech companies to pass on the extra costs to consumers, leading to widespread price hikes. For instance, Apple recently announced a 20% increase in the prices of its tablets and laptops, while Microsoft followed suit with a $100 (£75.70) rise for its five-year-old Xbox Series S and X consoles. These adjustments mark the third price increase for Microsoft’s consoles in under a year, with the cost of a new unit now up by 30% to 40% compared to the same period last year.

Consumer Frustration and Investor Concerns

Consumers are voicing their discontent, with many expressing frustration over the steep price increases. One user, responding to Microsoft’s decision on social media, joked,

“Xbox with another hardware price increase? I gotta laugh to keep from crying. My favorite hobby is cooked.”

Another Reddit commenter suggested that the company might as well “cancel” its upcoming Helix console, as the rising prices could make it unaffordable for most buyers.

Investors have also been affected, with Apple’s share price dropping after the announcement of its price hikes. Analysts believe this reflects broader concerns about the economic impact of AI investments. Yang Wang, a principal analyst at Counterpoint Research, described the memory crisis as “the most disruptive supply-side event the smartphone industry has ever faced.” While premium phone brands like Apple and Samsung have managed to avoid direct price increases, they are still feeling the strain of the supply chain disruptions.

The memory price surge is not limited to RAM. Popular memory kits, including DDR4 and its faster successor DDR5, have seen sharp spikes. For example, 32GB DDR5 components for PCs jumped from $94 in the three months leading up to September 2025 to $127 in the following quarter. By January to March 2026, the same components had surged 122% to $282. This has created a domino effect, with other components like DRAM and NAND flash also climbing in cost. These price fluctuations are now shaping the affordability of everything from smartphones to gaming consoles.

Broader Industry Impact

The memory crisis is not confined to Apple and Microsoft. Nintendo has announced plans to raise the price of its Switch 2 globally starting in September, while Valve recently launched its new Steam Machine gaming PC at a higher price than anticipated. The company attributed the increase to “spiking component costs,” echoing similar explanations from other firms. Valve had already raised the price of its Steam Deck handheld device by 40% in May for the same reason, highlighting the ongoing pressure on hardware manufacturers.

Analysts suggest that the tech giants are using the memory crisis as a way to justify price hikes, even as consumers struggle to keep up. Danni Hewson, head of financial analysis at AJ Bell, noted that 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.” This competition has allowed companies like TSMC to raise prices, knowing that customers are fighting over limited production capacity. The situation is further exacerbated by the fact that AI developers are using the same raw materials as consumer electronics, creating a direct link between the two sectors.

The financial implications of this trend are clear. As RAM and other components become more expensive, tech companies are passing on the burden to buyers. This has not only affected the affordability of devices but also raised questions about the sustainability of current pricing strategies. Some experts warn that the industry may face a prolonged period of inflation, as the demand for chips continues to outpace supply. The once-cheap components that powered affordable tech are now driving up costs, with consumers bearing the brunt of the financial impact.

The Future of Tech Pricing and AI Investment

While the price increases are a direct result of supply chain pressures, they also reflect the growing influence of AI in the tech sector. Companies are investing heavily in AI, aiming to capitalize on the excitement around generative AI technologies. These innovations promise productivity gains and profitability for businesses, but they come at a cost. The construction of massive data centres requires significant capital, and this has led to increased competition for chips, which are now at the heart of both AI development and consumer electronics.

As the memory crisis continues, it remains to be seen whether consumers will continue to support these price hikes or if the trend will force companies to rethink their strategies. For now, the message is clear: the rise of AI is reshaping the tech industry, and the financial burden is being shared by everyone involved. With the cost of RAM and other components still climbing, the future of affordable technology may depend on how well companies can navigate this new landscape of supply and demand.