AI race risks driving up cost of everyday electronics
India Today
Rising demand for memory chips driven by the AI boom has more than doubled prices since September 2025, pushing up manufacturing costs for smartphones and laptops.
GST cuts late last year may have lowered the prices of several electronic items, but costs are now poised to climb back to pre-cut levels. Manufacturers are grappling with an unprecedented surge in demand for memory chips, which power a wide range of devices from smartphones to medical equipment.
The soaring demand for memory chips is a side effect of the artificial intelligence boom, which is being hailed as a once-in-a-generation technology with the potential to transform industries across the board. Eager to capitalise on this opportunity, companies are investing and expanding capacity at an unprecedented pace.
According to Goldman Sachs, an additional half-trillion dollars is expected to be invested in the sector in 2026 alone, on top of more than $1 trillion already committed. Just four companies, Alphabet, Microsoft, Amazon, and Meta, are expected to account for the bulk of that spending.
While these mega investment announcements have excited proponents of the AI ecosystem, they have also fuelled a surge in demand for memory chips, as data centres require massive amounts of memory to enable AI to process words, images, videos, and perform countless other tasks.
Amid fears of a supply crunch, memory chip prices have more than doubled since September 2025. “Memory prices are expected to surge 40%-50% in Q4 2025 and further increases of 40%-50% are expected in Q1 2026 and around 20% in Q2 2026,” a Counterpoint Research’s January 7 report notes.
When it comes to memory chip manufacturing, just three companies, Samsung, SK Hynix, and Micron — account for 90% of global sales, according to Counterpoint Research. They have been inundated with orders from hyperscalers such as Alphabet, Microsoft, Amazon, and Meta, as the AI ecosystem requires vast amounts of memory capacity.
Rising demand for memory chips driven by the AI boom has more than doubled prices since September 2025, pushing up manufacturing costs for smartphones and laptops.
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