Gadget prices are rising as chip shortages squeeze the tech industry

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Gadget prices are rising as chip shortages squeeze the tech industry

Apple and Microsoft among the companies announcing price hikes.

PrevNextConsumers shopping for new tech devices are seeing higher prices as chip shortages and rising memory costs ripple across the industry.

By:Holly Firfer
, Emily Hanford-Ostmann
Posted
and last updated

Shoppers hunting for the latest tech are facing a new reality: the components powering their favorite devices are getting more expensive, and those costs are being passed along at checkout.

“Apple abruptly raised prices on pretty much all of its iPads, its MacBooks, even some home devices like the Apple TV and the HomePod,” said David Katzmaier, editor-in-chief of CNET. An entry-level iPad, for example, jumped from $349 to $449. A 13-inch MacBook Air went from $1,099 to $1,299. Microsoft has also announced that the new Xbox consoles will cost $100 to $150 more than their predecessors. Both companies point to rising storage and memory costs — part of an industry shakeup being dubbed “RAMageddon.” “This is an industry-wide issue where the prices of the components that go into all tech devices made nowadays are going up,” Katzmaier said. “That includes memory chips, RAM, devices that create processors in all the things that we have for tech.” Biju Nair, EVP and president of global connected living at Assurant, tells us the artificial intelligence boom is a major driver. AI requires massive amounts of advanced memory chips, leaving fewer available for everyday consumer devices and pushing costs higher.

RELATED STORY |Apple is hiking the prices of MacBooks and iPads due to the memory chip shortage As an example, Nair said the memory for an iPhone 17 Pro or Pro Max was about $39. The memory for the iPhone 18 is forecasted to be about $145. Not only will new iPhone models go up in price. Nair said Apple may raise the price of older-generation smartphones as well.

“Typically, what happens in the iPhone cycle is when the new device comes out, there is a little bit of a price increase, but the other generations go down by $100,” Nair said. “In this particular case, they are thinking of either holding steady in the older models or potentially even increasing the price of that older model.”

Apple CEO Tim Cook told the Wall Street Journal that price increases are “unavoidable.”

RELATED STORY |From unfilled gas tanks to fewer frills, here’s how US consumers are rethinking their spending Consumer gadgets had been one of the few areas where prices were falling in recent years, but the AI boom has reversed that trend. Most chips are manufactured outside the U.S., in countries like China and South Korea, making this a global issue.

“Manufacturing of chipsets, semiconductors in general, is not one of those things that they can actually turn the lever and start increasing the manufacturing,” Nair said. “It’s a very structured and disciplined process.”

Industry analysts expect suppliers to keep raising prices for the foreseeable future.

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