Apple's Price Hikes Signal Costlier Electronics for Years to Come
Consumers and businesses should brace for sticker shock when buying PCs, smartphones, tablets and other electronics. Relief may have to wait until 2029.
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If you find a deal on a PC or tablet, you may want to act fast. Prices will only go up from here.
The memory crunch we warned about in March, which was hammering the smartphone and PC market, has only gotten worse.
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Apple’s recent price hikes are the biggest shift in the consumer electronics market so far, with the massively popular brand raising prices 17% to 30% on laptops and tablets. Apple is likely to raise iPhone prices later this year, too. CEO Tim Cook blamed skyrocketing memory chip costs, saying he’s never seen anything like it in 40 years.
"Tight memory supply, due to immense AI infrastructure demand, has pushed prices 3-4 times higher than they were at the end of 2024, with further rises likely," says William Kerwin, an analyst at Morningstar, in a recent research note. “Memory has accounted for about 10% of an iPhone's cost, but inflation threatens to raise the cost of building an iPhone by 20% or more.”
AI infrastructure is hogging the manufacturing capacity of memory chip makers such as Micron, SK Hynix and Samsung. That leaves far less capacity for consumer electronics, causing vendors to scramble and swallow extremely high prices. Any new manufacturing capacity coming online in the near term will be prioritized for AI, not consumer gadgets.
New Apple pricing (Source: Associated Press ):
- MacBook Neo: Now $699, up from $599
- 512-gigabyte MacBook Air: Now $1,299, up from $1,099
- 1-terabyte MacBook Pro: Now $1,999, up from $1,699
- 128-gigabyte iPad Air: Now $749, up from $599
- 256-gigabyte iPad Pro WiFi: Now $1,299, up from $999
It’s hard to predict when the memory price hikes will cool off. "The supply-demand imbalance is expected to persist beyond 2027 in key segments," according to a recent article by Soo Kyoum Kim, an analyst at IDC. "We expect memory inflation to continue through 2028, but for prices to come back down thereafter as new supply comes online,” says Kerwin.
Sellers besides Apple had already been raising prices, and there’s more to come. "We also expect other PC and tablet brands to follow Apple’s example," said David Naranjo, an analyst at CounterPoint Research, in an online post. "They may raise prices on select products, cut discounts on entry-level models, or adjust their product lines to focus more on premium devices."
Consumers and businesses don’t have many options. One strategy is to hold on to PCs and phones longer. Many businesses will do this, extending hardware lifecycles beyond the traditional three to five years, at least for some work devices. That’s not easy to do, since newer models come with more-powerful processors and other improvements, which are often necessary to harness in-demand AI tools.
Used smartphones are another way to save. Refurbished phones are closely inspected and are a great option if you don’t mind a device that is two or three years old. When buying new, trade in your old phone to knock off at least some of the net cost.
Apple’s low-cost laptop, which uses an older iPhone chip, is still a good deal. The Neo’s new price is $700, up from $600. Premium smartphone vendors have low-cost lineups, too, such as the Apple iPhone 17e, Google Pixel 10a and Samsung Galaxy A37 5G. They cost around $450 to $600 (for now).
Shoppers should closely vet the tech specs of devices. Make sure an item that looks like a deal doesn’t come with hidden tradeoffs. A PC priced about the same as last year may come with far less storage, for example. Check new configurations of memory storage and random-access memory (RAM).
For consumers, soaring memory prices may sting the most for external hard drives, used to back up files, photos and videos. Be prepared to do a double-take at how much prices have skyrocketed compared with a year or two ago.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
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