The era of affordable laptops, budget smartphones, and inexpensive games consoles may be drawing to a close. This shift is not due to technological advancements in new models but rather a sharp rise in the cost of essential computer components.
Major laptop and phone manufacturers, including Microsoft, Samsung, and Dell, have recently begun increasing prices and discontinuing cheaper models. This trend is making it increasingly difficult to find budget devices under £400.
The Root Cause: RAMageddon
The underlying issue is a global shortage of memory chips, a phenomenon the tech press has labelled “RAMageddon”. Surprisingly, this shortage is not caused by geopolitical conflict or a lack of raw materials. Instead, it stems from the rapid expansion of artificial intelligence (AI) and the datacentres that power it.
Memory chips are integral to virtually all modern electronics, including graphics cards, creating a cascading effect across the industry. According to TrendForce, a market analyst firm, prices for mainstream laptops—typically costing around $900 (£667)—could rise by as much as 40% by 2026 due to the memory chip shortage and increasing costs of other components.
AI’s Role in the Shortage
Massive investments in AI have spurred an unprecedented expansion of server farms. These facilities are filled with computers that require vast quantities of high-end memory chips. This demand has absorbed not only the current global supply but also production capacity for the next several years, leading to a severe shortage and driving up costs for other electronics.
Furthermore, the supply of flash storage chips used in solid-state drives (SSDs) has been constrained as manufacturers shift production to higher-margin memory chips for AI. Similarly, the production of lower-end processors has been reduced in favour of high-end chips needed for AI workloads.
Impact on Budget Devices
Since profit margins on cheaper laptops, phones, and other electronics are slimmer, these devices are likely to see the most significant price increases. Analysts estimate that memory accounts for 30% of the cost of a budget smartphone and 23% of an entry-level laptop. As a result, many budget models may become economically unviable to produce.
Ranjit Atwal, senior director analyst at Gartner, stated: “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.”
Manufacturer Responses
Some electronics manufacturers anticipated the chip shortages and stockpiled crucial components to mitigate price hikes. Others have responded by phasing out lower-spec machines, effectively raising the entry price.
- Apple increased the starting price of its popular MacBook Air by £100 while doubling its minimum storage capacity.
- Microsoft phased out lower-end Surface models and added £170–£200 to the starting price, depending on the model.
- Dell, Lenovo, Framework, and other PC manufacturers have also raised prices.
- Sony raised the PS5 price by £90 on 2 April and is reportedly considering delaying the next-generation console.
- Microsoft increased Xbox prices last year by £20 to £50, depending on the model.
- Meta added £30 to the cost of its Quest 3S VR headset on 19 April.
- Samsung recently raised prices on some smartphone models, such as the 512GB S25 Edge, by £50.
- Multiple other smartphone manufacturers have warned of upcoming price rises this year.
Outlook and Advice for Consumers
Datacentre operators and AI companies have signed long-term agreements with suppliers to secure chips for at least the next few years. According to some estimates, as little as 60% of demand may be met. The main memory manufacturers—Samsung, SK Hynix, and Micron—are building additional capacity, but most new facilities will not be operational until 2027 at the earliest. SK Hynix expects the current shortage to persist until 2030.
This means price pressures on memory supplies are unlikely to ease in the near future.
How to Avoid RAMageddon
If you are planning to replace a device, it may be wise to do so sooner rather than later. Consider older models that were manufactured before the recent memory cost increases took effect. However, be cautious: retailers may artificially inflate prices on these models to capitalise on the situation.
Refurbished electronics offer a more affordable and environmentally friendly alternative. While their prices may also rise due to increased residual value, the increase is likely to be less severe than for new devices. Alternatively, repairing your current device instead of replacing it could be a cost-effective solution.
