Rising cost of memory chips puts pressure on electronics retailers

As the global artificial intelligence race accelerates, memory chip prices are rising. As a result, the cost of some consumer electronics is starting to rise for both retailers and consumers.

Memory storage, known as RAM, is important for all computing devices such as phones, tablets, and laptops. Supply shortages, driven largely by massive demand for AI data centers, are driving up the cost of chips. companies such as Nvidia, advanced micro device and google They are scrambling to secure RAM for their chips.

apple announced Thursday that it is increasing the prices of MacBooks and iPads. This will pass on the increase in memory prices to consumers, and there is a possibility that prices will increase further in the future. The company said in a statement that the memory shortage is an “unprecedented challenge.”

Incoming call best buy Chief Executive Officer Jason Bonfig said on a call with reporters earlier this month that he expects the company’s computing division to be hit hardest by the price increases.

“We had gradual price increases in the first quarter, so as we move into the second quarter, we expect (average selling prices) to increase and impact unit numbers from a resiliency standpoint,” Bonfig said. “We brought in more inventory in the first quarter, which you can see on our balance sheet, and that helps reduce inventory.”

Ranjit Atwal, senior director analyst at Gartner, cited a February study predicting that global PC shipments are expected to decline by 10.4% and smartphone shipments by 8.4% in 2026 due to rising memory costs. Gartner also predicts that PC prices will increase by 17% and smartphone prices by 13% compared to 2025 levels.

Atwal said, “Compared to last time when memory prices were increasing, what is happening this time is that memory prices have increased by a large amount.” “Secondly, there is a period of time where prices are likely to remain high.… Regional pricing is likely to be reached by the end of 2027.”

Atwal said that while price increases may not be immediately apparent in stores, it is inevitable that demand will outstrip supply. Some retailers brought forward inventory in the first quarter in anticipation of higher prices, but that cushion won’t last long, he added.

“We’ll catch up with everyone,” he said. “Eventually you get into a situation where you can’t control what you can do. You have to pass it on. That’s the difference between before and now. The market is also mature, so there’s an expectation that people will buy it anyway.”

Atwal said consumers may not be aware of the price increase. Most people upgrade their laptops after four or five years and may not even remember how much they paid or the specifications of the older model, he said.

Atwal said this gap may have some “lagged effects” on consumer behavior, but the ultimate impact should be immediate.

Bonfig said Best Buy so far hasn’t seen any signs that consumers are bringing their purchases forward or that rising memory prices are even impacting their budgets.

“What we do with that customer is talk to them about what they’re replacing, what their needs are, and how we can bring them technology that will significantly improve them in many ways,” Bonfig said. “This is exactly what we will continue to focus on to ensure that breadth and selection.”

A Best Buy spokesperson told CNBC that the company’s customers are still spending, and few are worried about memory. Best Buy announced its ninth consecutive quarter of positive comparable sales in its computing segment in the first quarter.

Anthony Chukumba, a Loop Capital analyst who covers Best Buy, told CNBC he believes large retailers such as Best Buy will fare better than smaller retailers because they have market share. Mr Chukumba said major retailers would have increased “clever” to avoid price increases wherever possible as suppliers passed on the additional costs.

“A lot of times investors oversimplify things, like, ‘Oh, memory costs are going up because of AI. That must be really bad for Best Buy,'” Chukumba says. “There’s nothing Best Buy can do about it. … This is their job, and they’re in control of these changes all the time, and they’re in control because they’re looking at the same things you’re looking at, probably before you’re looking at them, and in much more detail.”

Chukumba said he believes the long-term impact of memory costs is not as significant as it currently appears.

“Technology is constantly evolving and getting cheaper all the time, so you could face headwinds from higher memory prices. But if you’re buying something compared to what you were buying a year ago, let alone two years ago, it’s still going to have much better features, and consumers are smart as well,” he said.

Other retailers may also be affected. target, Amazon, costco and walmart. Target declined to comment on the rise in memory costs, and Amazon also declined to comment. Costco and Walmart did not respond to requests for comment.

Still, the broader risks posed by the memory chip shortage could pose a problem.

Atwal, the Gartner analyst, said rising costs could lead to fundamental changes in upgrade cycles for products such as smartphones as consumers use their devices longer.

“Consumers will…compromise on what they want, and vendors will have a harder time pushing AI capabilities because they rely on this and generally demand a premium from consumers,” Atwal said.

Earlier this month, a coalition of organizations, including the National Retail Federation, sent a letter to the U.S. Treasury and Commerce Department asking the government to investigate the “emergent imbalance” in memory chips and the potential for “significant and sustained short-term price increases” for consumers.

“The real-world effects of these trends are already beginning to be felt and threaten to worsen rapidly if the situation does not improve,” the letter said.

The groups called on the government to work with memory chip makers and chip buyers to “prevent harm to consumers, workers and businesses of all sizes.”

John Gold, NRF’s vice president of supply chain and customs policy, told CNBC that this trend could lead to shortages of consumer electronics, in addition to potentially higher prices.

“There are always limits to the impact that retailers can address on their own, so we need to work together as best we can with retailers to minimize price increases and the impact on consumers,” Gold said. “But the bigger impact is that the lack of these memory chips is potentially a lack of product.”

Gold said if consumers hold on to their devices longer because of rising prices or the difference in the cost of upgrades, it will impact both retailers and suppliers as the consumer electronics market stagnates.

“Unfortunately, this is an even more complicating factor for retailers and other businesses that are doing long-term planning and signing contracts six, nine, 12 months in advance,” Gold said. “It’s very complex, very complex, and it puts more pressure on retailers and manufacturers.”