Last week, Apple apologized to the public for what it was about to do. “We have never seen a component price increase this much, this quickly,” the company said in a statement, referring to the rising cost of memory and storage. “We have shielded our customers from these increases so far, but we have now reached a point where we need to begin raising prices on a number of products.”
Laptop prices are going up — the budget Neo, for example, now starts at $699 instead of $599, while at the higher end, a $1699 MacBook Pro is now $1999 — as are prices for iPads, HomePods, and Apple TVs.
An unprecedented AI data center roll-out is the root cause, here, and has been interfering with electronics supply chains for a while now. The global memory supply runs through a small group of firms, which has diverted much of its manufacturing capacity to meet the needs of the AI boom.
Last year, when evidence of the memory crunch started showing up in pockets of the consumer economy, gamers were hardest hit: Building a PC, once a way to get a deal, was becoming prohibitively expensive, as memory and graphics cards shot up; Micron, one of that group of manufacturers, announced it was exiting the consumer memory market entirely. In recent months, they’ve been squeezed even more.
The cheapest PlayStation 5 went up by $150. Nintendo’s Switch got a price hike, too, attributed to rising component costs. Valve’s handheld Steam Deck got a significant price adjustment and supply shortages, while the Steam Machine, announced this week, will start above $1000, which is much higher than potential buyers had expected. The next day, Microsoft piled on: “The price of Xbox consoles will increase by US$100 for 512 GB models and US$150 for 1 TB models,” the company said. “We will also be sunsetting our 2 TB model.” (The company also announced a 0% financing arrangement for gamers who would now need to buy on credit.) The most anticipated game of the year, Grand Theft Auto 6, is coming out in a few months, but a major retailer told Richard Wilcox of The Game Business that console demand will “likely outstrip supply during the year end period,” which could lead to shortages.
AI-driven product inflation has expanded beyond gaming, and Apple’s price jumps are actually a late indicator. Before its Xbox price changes, Microsoft had bumped prices of its Surface laptops up by hundreds of dollars. HP, Dell, Lenovo, Acer, Asus, and other laptop manufacturers have pushed up prices this year, while phonemakers — starting with Motorola and Samsung — are increasing MSRPs, while some manufacturers are talking about lowering specs. The iPhone probably isn’t far behind.
There are echoes here of the mid-Covid chip shortage, which rippled through the consumer economy in surprising ways back in 2021. On the current trajectory – if relief is coming, most analysts don’t think it’ll arrive until at least late next year — AI-driven component demands are expected to start putting pressure on prices beyond categories associated with computing. Nearby, in other electronics categories, low-margin electronics like TVs and Bluetooth speakers will have to absorb new component costs, while cars, which are increasingly sold around their infotainment systems and driver-assist capabilities, could soon be dealing with shortages and price increases as well.
Major home appliances, many of which have been implanted with tablets and labeled “smart,” will be affected. Trade groups are lobbying the government, warning that production of medical devices and telecom equipment, which depend on components that are less profitable for constrained memory manufacturers to make than high-end AI-specific hardware, will soon be disrupted, risking shortages and problems for government procurement and defense contracts.
As with the Covid chip shortage, the consequences of the memory crunch will appear to the general public in ways that can feel sort of strange and random. Unlike the Covid chip shortage, the explanation for all this is fairly unsatisfying: Well, a few companies really, really want to build AI. This is a particularly unsympathetic reason in 2026, when public fears and skepticism about the American economy’s biggest bet in decades are high and rising. This week, investor Paul Kedrosky tried to explain America’s particular species of angst about AI, which is far more intense than almost anywhere else in the world:
In rich countries with more formal labor markets … A.I. looks more like an ambush. It threatens what people already have: stable employment, predictable income and accumulated professional standing. While A.I. might help in the abstract, people are more worried about a socioeconomic trapdoor opening beneath their feet and eroding that stability.
In countries with stronger safety nets and more accessible healthcare, this threat, which is routinely articulated as such by AI leaders, is felt less acutely; here, he writes, job loss is “more threatening than anywhere else in the wealthy world,” turning “what should be a setback into a potential cascade — income, insurance, mortgage and child care, all at risk at once.” America’s uniquely consumption-centric economy means that discretionary price hikes — not to mention AI-linked energy cost increases, which are already showing up in actual top-line inflation figures — could meaningfully contribute to an already apocalyptic mood, and feed into increasingly feral backlash.
Whatever stories the industry is trying to tell, what people are actually receiving isn’t great. The bad news? Most of the things you want to buy, including many of society’s most potent symbols of success, leisure, and comfort, seem to be slipping out of reach. The good news? The machines we’re hoarding resources to build, and which we hope can one day take your job, are coming along nicely.
