The era of affordable laptops, budget smartphones, and inexpensive gaming consoles may be drawing to a close. This shift is not due to technological advancements but rather a sharp increase in the cost of computer components. Major manufacturers, including Microsoft, Samsung, and Dell, have begun raising prices and discontinuing cheaper models, making it increasingly difficult to find budget devices under £400.
The Root Cause: RAMageddon
The primary driver of these price increases is a shortage of memory chips, a phenomenon the tech press has dubbed "RAMageddon." Unlike typical shortages caused by conflicts or material scarcity, this one stems from the rapid growth of artificial intelligence (AI) and the massive datacenters that support it. Memory chips are essential components in nearly all modern electronics, including graphics cards, creating a ripple effect across the industry.
According to TrendForce, a market research firm, the price of 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 parts. The massive investments in AI have led to a significant expansion of server farms, which are packed with high-end memory chips. This has absorbed not only the current global supply but also production capacity for several years, exacerbating the shortage and driving up costs for other electronics.
Impact on Storage and Processors
The situation is further complicated by constraints on flash storage chips used in solid-state drives (SSDs). Manufacturers have shifted production to higher-margin memory chips for AI, reducing the supply of lower-end processors as well. Since profit margins on cheaper laptops, phones, and other electronics are thinner, these budget models are most vulnerable to price increases. Analysts estimate that memory accounts for 30% of the cost of a budget smartphone and 23% of an entry-level laptop, making many of these models economically unviable.
Ranjit Atwal, senior director analyst at Gartner, predicts that "the sub-$500 (£370) entry-level PC segment will disappear by 2028" as vendors can no longer absorb the sharp cost increases.
Price Hikes Across the Board
Some electronics manufacturers anticipated the chip shortage and stockpiled components to mitigate price increases. Others have responded by phasing out lower-spec models, effectively raising entry-level prices. For example, Apple increased the starting price of its popular MacBook Air by £100 while doubling its minimum storage. Microsoft discontinued lower-end Surface models and added £170–£200 to starting prices, depending on the model. Dell, Lenovo, Framework, and other PC manufacturers have also raised prices.
In the gaming world, Sony increased the PS5 price by £90 on April 2 and is reportedly considering delaying its successor. Microsoft raised Xbox prices by £20–£50 last year, depending on the model. Meta added £30 to the Quest 3S VR headset on April 19, and Samsung upped prices on some smartphone models, such as the 512GB S25 Edge, by £50. Multiple other smartphone manufacturers have warned of further price increases this year.
How to Navigate RAMageddon
Datacenter operators and AI companies have secured long-term agreements with chip suppliers, locking in supply for at least the next few years. Some estimates suggest that only 60% of demand for memory chips will be met. Major memory makers—Samsung, SK Hynix, and Micron—are building additional manufacturing capacity, but most new facilities won't be operational until 2027 at the earliest. SK Hynix expects the current shortage to persist until 2030, meaning price pressures on memory will not ease soon.
For consumers, the best strategy is to replace devices sooner rather than later. Older models manufactured before the memory cost increases may still be available at reasonable prices, though buyers should be cautious of retailers artificially inflating prices. Refurbished electronics offer a more affordable and environmentally friendly alternative. While their prices may also rise due to increased residual value, the increases are likely less severe than for new devices. Repairing existing devices is another option to consider instead of replacing them.
