The end of the cheap laptop, the bargain phone and affordable games consoles may be on the horizon. Not because new models are more hi-tech, but because the cost of computer components has shot up.
Recently, the biggest manufacturers of laptops and phones, including Microsoft, Samsung and Dell, started putting up prices and pulling cheaper models – which is going to make finding budget phones and laptops under £400 much harder.
The root cause is a shortage of memory chips which the tech press has dubbed “RAMageddon”. But it isn’t a conflict or lack of materials causing the shortage, it is the growth of artificial intelligence (AI) and the datacentres the technology relies on.
Memory chips are crucial to just about every modern piece of electronics and are also used in other important components such as graphics cards, creating a knock-on effect.
The analyst firm TrendForce estimates prices for mainstream laptops typically costing about $900 (£667) might increase in price by as much as 40% in 2026 owing to the memory chip shortage and rising cost of other parts.
Huge investments into AI have led to a huge expansion of server farms, enormous banks of computers filled with large amounts of high-end memory chips. That has sucked up not only the world’s current supply, but its production capacity for several years, creating a dramatic shortage of memory and driving up the cost of other electronics.
If that wasn’t bad enough, the supply of flash storage chips used in SSDs (solid state drives) has been constrained as manufacturers have switched to producing higher-margin memory chips for AI. The supply of lower-end processors has also taken a hit as manufacturers have switched production to high-end chips to meet the demand for AI-related work.
Since the margins on cheaper laptops, phones and other electronics are smaller, they are likely to be the ones facing the largest increases in price. Some analysts say memory accounts for 30% of the cost of a budget smartphone and 23% of an entry-level laptop, which means many budget models may no longer be viable to make.
“This sharp increase removes vendors’ ability to absorb costs, making low-margin entry-level laptops non-viable. Ultimately, we expect the sub-$500 (£370) entry-level PC segment will disappear by 2028,” said Ranjit Atwal, senior director analyst at research firm Gartner.
Rising prices
Some electronics manufacturers saw the chip shortages happening and stockpiled crucial components in an effort to ride out the price increases. Others have handled rising costs by phasing out lower-spec machines, in effect increasing the starting price.
Apple, for instance, increased the starting cost of its popular MacBook Air laptop by £100 while doubling its minimum storage. Microsoft phased out lower-end models of…
Source link
Disclaimer
We strive to uphold the highest ethical standards in all of our reporting and coverage. We blogs.grocliq.com want to be transparent with our readers about any potential conflicts of interest that may arise in our work. It’s possible that some of the investors we feature may have connections to other businesses, including competitors or companies we write about. However, we want to assure our readers that this will not have any impact on the integrity or impartiality of our reporting. We are committed to delivering accurate, unbiased news and information to our audience, and we will continue to uphold our ethics and principles in all of our work. Thank you for your trust and support.
Website Upgradation is going on for any glitch kindly connect at [email protected]
