The Cheap Electronics Era Is Over

For four decades, computers got cheaper. Every year, more power for less money — a deflationary run so reliable it became background noise, the one corner of the consumer economy where prices only moved one way. It is now moving the other. Oxford Economics analysis of government data shows personal computer prices rising more than 3% per month — the first sustained increase since the early 1980s. ^[1] The run is over. What ended it is not a supply-chain hiccup or a cyclical swing. It is a strategic reallocation of the world's memory chips from consumer electronics to AI data centers, and the cost is cascading through every product category, every price band, every continent. The burden is not distributed evenly. It is regressive: the cheaper the product, the harder it is to absorb a component whose cost has doubled or tripled, and the more likely the product is to simply disappear. Apple moved most visibly. On June 25, the company raised prices 15 to 33 percent across nearly its entire product line — Macs, iPads, Apple TV, HomePod, Vision Pro — with the Mac Studio jumping $1,300. ^[2] Tim Cook called the memory crisis "a hundred-year flood" and said he had "never seen anything like it in any area in over 40 years."

Price increases are unavoidable. — Tim Cook

But Apple was not first. Samsung had already raised U.S. prices for Galaxy phones and tablets in April, concentrating the increases on memory-intensive configurations: the Galaxy Tab S11 Ultra with 1TB of storage went up $280, to $1,899.99, while the base Galaxy S26 series was held flat. ^[3] The pattern was the same at both companies — the more memory a device carried, the harder it was hit. One tier down, the damage deepens. Qualcomm announced double-digit price increases effective September 1, citing exhaustion of its ability to absorb rising supplier costs. The hikes will flow through Snapdragon-powered Windows laptops, Meta Quest headsets, and flagship Android phones from Samsung, Xiaomi, and OnePlus. ^[4] Roku raised U.S. streaming hardware prices 50 to 60 percent — the Ultra from $100 to $150, the Streaming Stick 4K from $49.99 to $79.99 — directly attributing the increases to RAM shortages caused by AI data center demand. ^[5] The reversal was stark: in May, Roku CEO Anthony Wood had claimed the company's low memory requirements were a competitive advantage during the shortage.

In the TV business, every dollar matters. It's a hugely price-competitive market. — Anthony Wood

Weeks later, the component tax overwhelmed even that positioning.

the Roku TV operating system requires significantly less memory and storage than all our competing platforms — Anthony Wood

At the budget tier, the tax does not raise prices — it kills products. Nothing, the London-based smartphone maker, cancelled its CMF-branded budget phone entirely. Co-founder Akis Evangelidis explained why.

We were working on a successor but with memory prices where they are right now, we can’t build a phone that feels like a genuine step forward at a price that makes sense for CMF — Akis Evangelidis

Carl Pei, Nothing's CEO, had warned months earlier that memory costs had surged up to three times, with top-tier modules that cost under $20 a year ago potentially exceeding $100 by the end of 2026. "2026 is the year the specs race ends," he said. ^[6]

For the first time, smartphones are competing directly with AI infrastructure and memory prices are rising sharply as a result — Carl Pei

The extermination is not anecdotal. Gartner projects the sub-$500 PC segment will "completely disappear by 2028." ^[7]

This is the steepest contraction in device shipments witnessed in over a decade. — Ranjit Atwal

IDC forecasts global PC shipments down 12 percent this year, with sub-$500 systems plunging 28 percent — even as total market value rises, because the units that do sell are more expensive. IDC's Jitesh Ubrani called it "a new normal of structurally higher prices" and declared "the era of bargain-priced PCs and tablets is behind us." ^[8]

For lower-priced products, there is less margin room to absorb rising costs, and consumers in this segment are typically more sensitive to price fluctuations. — Ben Yeoh

The sharpest cut is in Africa, where Omdia forecasts a 23 percent decline in smartphone shipments for 2026. Eighty-one percent of phones sold on the continent last year cost less than $200 — precisely the band where the component tax makes a device unviable. ^[9]

Following a strong 2025, Africa’s smartphone market is forecast to undergo a correction in 2026, with shipments expected to decline by 23% year-on-year. — Manish Pravinkumar

The mechanism driving all of this is not a temporary mismatch. Memory makers have locked in more than $100 billion in take-or-pay contracts with AI data center customers — Micron alone signed 16 Strategic Customer Agreements guaranteeing minimum revenue over three to five years. ^[10] Those contracts physically commit future factory output to AI customers before it is even produced, removing it from the consumer spot market. Micron discontinued its Crucial consumer brand to prioritize high-margin AI demand. IDC characterized the situation as "a strategic reallocation of capacity rather than a cyclical mismatch." ^[11]

Nobody is getting everything they want, and we regret that. — Micron Technology

New factories will not fix this: SK Hynix plans to double production capacity over five years, but the output is already spoken for. ^[12] There is one counter-signal worth noting. SanDisk stock fell 9.8 percent on July 7 amid a broader semiconductor sell-off triggered by Samsung's fab expansion announcements — investors betting that new capacity could eventually flood the market and ease prices. ^[13] But the executives who run the memory industry are telling a different story. Samsung's Kim Jaejune stated that "based solely on the demand currently received for 2027, the supply-to-demand gap for 2027 is set to widen even further than in 2026."

Based solely on the demand currently received for 2027, the supply-to-demand gap for 2027 is set to widen even further than in 2026. — Kim Jaejune

Microsoft, in announcing $100 to $150 Xbox price increases, said it expects memory costs to double again by fall 2027. ^[2]

Unfortunately, console storage and memory prices have increased by more than 2.5x, and we expect another doubling by the fall of 2027. — Microsoft

SK Group chairman Chey Tae-won warned the shortage will persist "until 2030."

Until 2030 there’s still some shortage. — Chey Tae-won

These are not the timelines of a cyclical dip. The component tax does not merely raise prices. It eliminates products and markets at the bottom — the $200 phone, the sub-$500 laptop, the streaming stick that cost $50. What the AI boom costs is not measured only in data center capital expenditure. It is measured in the devices that will never be built, and in the markets that will be left behind.