Global artificial intelligence demand is driving up the price of household electronics by fueling a memory chip shortage. According to industry experts, high-end smartphones are surging by up to 30% and entry-level laptops are climbing between 10 and 20%, as technology companies buy up massive amounts of RAM for AI data centres.
The AI Data Centre Boom and the RAM Crunch
The acceleration of the global artificial intelligence race has squeezed the supply of memory storage, known as RAM, which serves as a vital component for all computing devices including phones, tablets, and laptops. This surge is directly driven by technology companies building AI data centres that require immense amounts of memory components.
These data centres support critical internet services such as cloud storage, online banking networks, and artificial intelligence tools. The resulting chip shortage has triggered a dramatic escalation in hardware costs over the past year. Ben Maxwell, founder of Tauranga electronics store Compulsion Tech, illustrated the steep trajectory of component prices to 1News:
How Rising Chip Costs Hit Everyday Consumers
The ripple effects of the memory shortage are hitting household budgets at a time when technology is no longer an optional luxury. Craig Young, chief executive of the Technology Users Association, noted that essential consumer devices are seeing significant retail inflation.
We’re seeing phones at the high level going up anywhere up to 30%. Entry level laptops are going anywhere up between 10 and 20%,
Young told 1News, adding that consumers will likely have to live with this problem for the next two years.
Young emphasized that devices are indispensable for modern life, work, and education, meaning the shortage increases the fundamental cost of participating in society and schooling.
Kiwis Pivot to Repairs and Component Upgrades
Faced with escalating replacement costs, many consumers are choosing to service or upgrade their existing hardware instead of buying brand-new systems.
A customer might have built a computer for $2000 a few years ago when RAM cost only $200, according to Maxwell. With replacement memory now running around $800 for the exact same capacity, owners are questioning the value of buying entirely new machines when individual parts can be swapped out.
At the same time, simple fixes are keeping older devices functional. Fraser Webb, director of Auckland electronics workshop Good Tech, told 1News that many problems are much easier to resolve than owners realize, noting that simple maintenance like cleaning out lint-clogged ports or swapping a dying battery can revive a device.
Pressure on Community Refurbishment Networks
The broader electronics inflation is also creating severe bottlenecks for organizations that refurbish and distribute donated technology to families in need. Kris Dempster-Rivett, chief executive of Digital Future Aotearoa, told 1News that suppliers and manufacturers have issued warnings regarding upcoming price increases.
Simultaneously, because individual consumers are holding onto their electronics for longer periods to avoid high replacement costs, the pool of available donated devices has shrunk. Dempster-Rivett noted that the organization currently carries a waiting list of whānau and community groups requesting devices that cannot be serviced under current supply constraints.
Global Infrastructure Demand Keeps Prices High
With global demand for artificial intelligence infrastructure expected to continue growing worldwide, market experts warn that consumers should not expect hardware prices to ease anytime soon.
