Consumers expecting lower prices for older tech devices are facing a new reality: the cost of smartphones, laptops, and other electronics is rising mid-product cycle. This shift is largely driven by soaring memory chip prices, which have seen dramatic increases in recent quarters, impacting the entire technology supply chain.
AI Demand Fuels Memory Price Surge
Memory chip prices surged by as much as 98% in the first quarter of 2026, with projections for a further 58-63% increase in the current quarter, according to TrendForce. This has directly affected consumer products; for instance, Apple recently raised prices across its Mac lineup globally, with the entry-level MacBook Neo seeing a 14.3% jump in India.
At the heart of this escalation is the rapid growth of High Bandwidth Memory (HBM), an advanced memory type crucial for artificial intelligence accelerators. These chips require vast amounts of high-performance memory to feed data to Graphics Processing Units (GPUs) efficiently, making HBM the memory industry’s fastest-growing and most profitable segment.
“HBM and data centre DRAM are undersupplied due to high demand from hyperscalers and cloud service providers,” notes Parv Sharma, senior analyst at Counterpoint Research. “All three memory vendors (Micron, Samsung, and SK Hynix) are prioritising wafer starts towards HBM because of the margin differential in pricing. Thus, commodity DRAM supply is being structurally tightened by HBM conversion.” This shift means fewer manufacturing resources are available for conventional DRAM used in everyday devices, driving up prices across the board. NAND flash memory, used for data storage, is also seeing less investment compared to advanced DRAM and HBM.
Billions Invested, But Relief is Distant
In response to the structural shortage, memory manufacturers are embarking on one of the largest investment cycles in decades. Samsung and SK Hynix have announced joint plans for over $500 billion to build four mega-fabrication plants and advanced-packaging hubs in South Korea. Micron Technology is also undertaking ambitious expansions, constructing a leading-edge DRAM factory in Boise, Idaho, planning a manufacturing campus in Clay, New York, and expanding its Hiroshima facility in Japan.
Despite these monumental investments, the industry faces a critical constraint: time. Building a modern, leading-edge memory fabrication plant is a multi-year endeavor. From groundbreaking to high-volume manufacturing, a new fab typically takes three to five years. Construction and cleanroom installation alone require 18-30 months, followed by another 9-15 months for equipment installation and qualification, according to Manish Rawat, a semiconductor analyst at TechInsights.
Long lead times for specialized equipment, such as ASML's Extreme Ultraviolet (EUV) lithography machines, which can take 18-24 months to deliver, further extend the timeline. Even after physical construction, achieving competitive production yields and securing customer approval can take an additional 12-18 months or more, especially for complex advanced DRAM and HBM processes involving EUV lithography, higher layer counts, through-silicon vias (TSVs), and advanced packaging.
From Glut to Scarcity: A Rapid Reversal
The current crunch follows a period just three years prior when the industry grappled with oversupply. As the pandemic-era boom in PCs and smartphones subsided, device makers were left with excess inventory, causing DRAM and NAND prices to collapse. Memory manufacturers responded by cutting production and postponing investments to mitigate losses. However, the unexpected rise of generative AI quickly created an unprecedented surge in demand for HBM and data-center DRAM, leaving manufacturers scrambling to add capacity they had only recently scaled back.
Outlook: Continued Supply Constraints
While the current wave of investment will eventually add significant capacity, analysts do not foresee an immediate end to the shortage. “AI demand is growing at an exceptionally rapid pace,” Rawat states. “While these investments should ease the severity of shortages over time, demand is expected to outpace supply for much of the expansion cycle. Rather than returning to prolonged oversupply, the market is likely to experience periodic supply constraints over the next five years.” Consumers and businesses should anticipate continued pressure from rising memory costs until the gap between supply and AI-driven demand narrows significantly.