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For much of the past three years, the global technology industry has been defined by shortages, delays and supply-chain shocks. Now, even as the broader semiconductor crunch eases, a new shortage is taking hold: advanced memory chips. Driven by the AI data-centre boom, the squeeze is pushing up costs for device makers and threatening to keep smartphones, laptops and other gadgets pricier for longer.
The problem is not a shortage of chips in the traditional sense. It is a shortage of memory chips, the essential components that power everything from laptops to gaming consoles and data centres. And the reason is the artificial intelligence boom.
As AI companies race to build ever-larger data centres, they are absorbing a growing share of the world’s advanced memory supply, pushing up prices for DRAM, NAND flash and high-bandwidth memory at a pace that consumer electronics makers can no longer ignore. The latest results from Micron Technology, one of the world’s biggest memory chipmakers, show just how dramatic the shift has become.
Micron reported a nearly 15-fold jump in quarterly profit and issued a strong outlook, underscoring how the AI infrastructure race has turned memory chips into one of the most valuable commodities in the technology sector. For investors, that is a windfall. For consumers, it is a warning.
The first signs are already visible. Apple has raised prices on several products, including iPads, MacBooks, Apple TV and HomePod devices, citing sharply higher memory and storage costs. Analysts say more device makers are likely to follow, which means the next smartphone, laptop or tablet you buy may cost more — even if the chip shortage that dominated headlines during the pandemic is technically behind us.
AI is swallowing the memory supply
The current squeeze is different from the broad semiconductor shortage that disrupted everything from cars to washing machines during the pandemic. Back then, the problem was a lack of chips across the board. Today, the bottleneck is concentrated in memory — a category that has become indispensable to AI.
Modern AI servers require vast quantities of DRAM, high-bandwidth memory (HBM) and NAND flash storage to train and run large language models, coding tools and other AI applications. These are not niche components. They are the backbone of nearly every modern digital device.
But AI has changed the economics of supply. Companies such as Nvidia, Microsoft, Amazon, Meta and Alphabet are pouring hundreds of billions of dollars into AI infrastructure, and in doing so, they are locking up future memory production through long-term supply agreements. That leaves less capacity for consumer electronics makers, who are now competing for a shrinking pool of chips.
Micron said it has secured more than $22 billion in long-term customer commitments, many of them backed by upfront payments to guarantee supply. The company expects revenue to rise to around $50 billion this quarter, while its adjusted gross margin is projected to climb to about 86 per cent — a striking sign of how much pricing power memory makers now hold.
The message from the industry is clear: AI customers are willing to pay more, and memory manufacturers are prioritising those orders. Consumer devices, by contrast, are being pushed further down the queue.
Apple can no longer absorb the shock
If there is one company that usually has the scale, bargaining power and supply-chain discipline to absorb component inflation, it is Apple. Yet even Apple has now admitted that the pressure has become too severe to fully shield customers from.
The company has
raised prices across several products. The MacBook Air with 512 GB of storage now starts at $1,299, up from $1,099, while the MacBook Pro with 1 TB of storage has risen to $1,999 from $1,699. The iPad Air with 128 GB storage has also become significantly more expensive.
Apple said memory and storage costs have risen so sharply that continuing to absorb them is no longer sustainable. Chief Executive Tim Cook has also warned investors that higher memory costs will increasingly affect the company’s business, with more supply being diverted to AI applications rather than consumer devices.
For now, the iPhone has been spared from the latest round of increases. But analysts say that may not last. Apple’s flagship smartphone remains the company’s biggest revenue driver, and if memory prices continue to climb, future iPhone models could also see higher starting prices.
That would be a significant shift. Apple has long used its scale and supply-chain relationships to keep pricing relatively stable, even when component costs rose. The fact that it is now raising prices on multiple product lines suggests the pressure is broad, persistent and unlikely to ease quickly.
The scale of the price surge helps explain why manufacturers are struggling to hold the line.
According to TrendForce, DRAM prices jumped by as much as 98 per cent in the first quarter of 2026 and are expected to rise by another 58-63 per cent in the current quarter. In industry circles, the phenomenon has already earned a grim nickname: “RAMageddon”.
This is not a temporary spike caused by a one-off disruption. It is structural.
Memory chip production cannot be expanded overnight. Building a semiconductor fabrication plant costs billions of dollars and typically takes two to three years before commercial production begins. Even after construction, it takes additional time to ramp up output and reach full efficiency.
That means supply will not catch up with demand quickly, especially when AI companies are signing long-term contracts and locking in capacity years ahead of time. In effect, the market is being pulled in two directions at once: AI is consuming more memory than ever, while consumer electronics makers are being forced to pay more for what remains.
The consumer electronics industry is under pressure
The impact is already spreading across the broader consumer tech market.
Microsoft recently launched new Surface Pro models with much higher starting prices. Nintendo raised the price of its Switch 2 console earlier this year, citing market conditions. Sony has also increased prices for its PlayStation hardware. These are not isolated moves. They are signs of a wider repricing across the electronics industry.
Apple’s latest decision is particularly important because it often sets the tone for the rest of the market. When a company with Apple’s scale and supplier leverage says it can no longer absorb rising memory costs, smaller rivals have even less room to manoeuvre.
That could have a direct effect on demand. IDC expects global smartphone shipments to fall by nearly 14 per cent in 2026, which would mark the steepest annual decline on record. PC shipments are projected to drop by 11.3 per cent. Higher prices are likely to deepen that slowdown, especially in the mid-range and entry-level segments where buyers are more sensitive to cost.
Even products designed to compete on affordability are losing their edge. Apple’s MacBook Neo, launched earlier this year as a lower-priced alternative to Windows laptops and Chromebooks, has seen its starting price rise from $599 to $699. That narrows its advantage against rivals and weakens one of the few bright spots in the PC market.
Micron’s surge is a sign of a deeper shift
Micron’s blockbuster earnings are not just a corporate success story. They are a signal that the balance of power in the semiconductor industry is changing.
For years, the AI conversation was dominated by processors — especially Nvidia’s graphics chips. But AI systems do not run on processors alone. They also require enormous amounts of memory to move, store and retrieve data at speed. That has made memory chips just as critical to the AI stack as the processors themselves.
Micron, along with Samsung Electronics and SK Hynix, effectively controls the global memory market. With only a handful of major suppliers and demand rising sharply, the industry has entered a phase where memory makers can dictate terms to buyers.
That is why the biggest customers are now willing to sign multi-year contracts and make upfront payments to secure supply. It is also why consumer electronics companies are being squeezed out. They are not competing with each other alone; they are competing with the AI industry for the same chips.
The result is a market in which the old chip shortage may be fading, but a new and more expensive one has taken its place.
What this means for buyers
For consumers, the implications are straightforward but unwelcome.
If memory prices remain elevated, manufacturers will either pass on the cost directly or reduce features to protect margins. In practical terms, that means higher prices, fewer discounts and less room for aggressive product launches in the months ahead.
The pressure will be felt across categories: smartphones, laptops, tablets, gaming consoles and smart devices. Premium products will become more expensive, but even budget and mid-range devices may lose some of their affordability as manufacturers adjust pricing to reflect higher component costs.
This is especially significant because consumer electronics markets were already under strain from weak demand, slower replacement cycles and cautious spending. Higher prices could further delay purchases, particularly in markets where buyers are already price-sensitive.
The AI boom is delivering extraordinary profits for memory chipmakers and fuelling a new wave of investment in data infrastructure. But it is also creating a less visible consequence: the rising cost of everyday electronics.
As AI data centres absorb more of the world’s memory production, consumer device makers are being forced to pay more for the chips that power their products. Apple’s price hikes are only the clearest sign of a broader trend that is likely to spread.
So while the semiconductor shortage of the pandemic era may be easing, the memory crunch is just beginning. And unless new capacity comes online much faster than expected, the next smartphone or laptop you buy may cost more — not because chips are unavailable, but because the most important ones are being pulled into the AI race.
