Gadget prices have fallen for decades. Then AI happened.
Summary
Prices for consumer electronics like computers and game consoles are rising after decades of falling because of a shortage of memory and storage chips. This shortage is caused by big tech companies buying most of the chips to support new artificial intelligence (AI) data centers, making chips more expensive and harder to find for everyday devices.Key Facts
- Consumer electronics prices are rising due to a shortage of memory and storage chips.
- Big tech companies like Alphabet, Amazon, and Meta are buying most chips for AI data centers.
- This leaves fewer chips available for devices like smartphones, tablets, and game consoles.
- Apple and Microsoft have increased prices on products such as iPads, MacBooks, and Xbox consoles.
- Apple may also raise iPhone prices by up to $200 for Pro models to cover higher costs.
- Leading chip makers Micron, Samsung, and SK Hynix focus more on profitable AI-related chip production than on consumer chips.
- The current chip shortage and price increases are worse than those seen during the COVID-19 pandemic.
- Building new chip factories is very expensive and takes up to five years, so supply cannot quickly increase.
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