Surging Memory Chip Prices Cloud the Outlook for Consumer Electronics

The global market for consumer electronics is heading into a tougher year as soaring memory chip prices force manufacturers to raise prices and consumers to think twice before upgrading.

Demand for smartphones, personal computers, and gaming consoles is now expected to decline in 2026, reversing earlier growth forecasts. Companies ranging from Britain’s Raspberry Pi to PC giant HP are already hiking prices to offset rising memory costs, and more increases appear likely.

At the heart of the problem is artificial intelligence. The rapid expansion of AI infrastructure by U.S. tech heavyweights such as OpenAI, Google, and Microsoft has soaked up a huge share of the world’s memory chip supply. Chipmakers are prioritizing higher-margin data center components, leaving fewer chips available for consumer devices and pushing prices sharply higher.

That shift has been a boon for memory producers. Samsung, SK Hynix, and Micron the world’s three largest memory chip makers have all reported strong earnings in recent quarters, citing intense demand and rising prices. But those gains are now rippling through the consumer electronics market.

Research firms IDC and Counterpoint now forecast global smartphone shipments to fall by at least 2% this year, a sharp turnaround from expectations just months ago. If that happens, it would mark the first annual decline since 2023. The PC market looks even weaker, with IDC predicting a 4.9% contraction in 2026 after solid growth last year. Gaming consoles are also expected to struggle, with TrendForce projecting a 4.4% drop in sales following growth in 2025.

Tough Calls for Device Makers

Manufacturers face an uncomfortable choice: absorb higher costs and hurt margins, or pass them on to consumers and risk slowing demand.

“Some companies may swallow part of the cost, but given the scale of the shortage, higher prices are unavoidable,” said Jacob Bourne, an analyst at Emarketer. “That’s likely to result in weaker consumer device sales in 2026, especially against a backdrop of broader inflation.”

The pressure isn’t easing anytime soon. Counterpoint estimates memory prices could jump another 40% to 50% in the first quarter alone, following a roughly 50% surge last year. Some niche components have seen even more extreme spikes.

“We’ve seen price inflation of up to 1,000% for certain products over the past two quarters, and prices are still climbing,” said Tobey Gonnerman, president of semiconductor distributor Fusion Worldwide. “Consumers should expect noticeably higher prices for laptops, smartphones, wearables, and gaming devices very soon.”

Lower- and mid-range device makers are expected to feel the impact most. Analysts point to Chinese smartphone brands like Xiaomi and TCL, as well as PC makers such as Lenovo, as being particularly exposed. TrendForce previously reported that Dell and Lenovo were planning price hikes of up to 20% in early 2026.

Investors have already reacted. Shares of companies including Raspberry Pi, Xiaomi, Dell, HP, and Lenovo fell over the final months of 2025, with Xiaomi posting the steepest drop at more than 27%.

Executives are increasingly open about the challenge. HP CEO Enrique Lores said in November that the company would raise PC prices due to “significant” memory costs, while Raspberry Pi’s CEO described the surge as “painful” when announcing price increases late last year.

The slowdown could also hit electronics retailers such as Best Buy, which has warned that rising prices already under pressure from tariffs could discourage shoppers.

Apple’s Advantage

Not all manufacturers are equally vulnerable. Analysts say Apple is better positioned than most to handle the memory chip crunch, thanks to its scale, pricing power, and long-standing supplier relationships.

Apple typically keeps U.S. prices for its flagship iPhones steady between launch cycles and has previously absorbed major cost increases, including tariff-related expenses, rather than passing them on to customers.

“Apple benefits from contract pricing rather than volatile spot markets, which helps it secure more stable input costs,” said Morningstar analyst William Kerwin. “That said, it’s not immune and higher prices remain a possibility if costs continue to rise.”

As earnings season approaches, with Apple reporting on January 29 and Dell following in late February, investors will be watching closely to see just how much of the memory chip shock companies can absorb and how much will ultimately land on consumers.