Surging memory chip prices dim outlook for consumer electronics makers

By Jaspreet Singh and Zaheer Kachwala

Jan 22 (Reuters) – Global demand for smartphones, personal computers and gaming consoles is expected to shrink this year as companies from Britain’s Raspberry Pi to HP Inc raise sticker prices to offset surging memory chip costs.

The rapid build-out of artificial intelligence infrastructure by U.S. tech firms such as ​OpenAI, Alphabet’s Google and Microsoft has absorbed much of the world’s memory chip supply, which has lifted prices as manufacturers prioritize components for higher-margin data centers over consumer devices.

South Korea’s ‌Samsung and SK Hynix, and Micron, the world’s three largest producers of memory chips, have all said that they were struggling to keep up with demand that boosted their quarterly earnings.

“Rising (memory) pricing is a dynamic we continue to watch ‌closely, especially relative to the client market, and could limit our revenue opportunity this year,” Intel CFO David Zinsner said on Thursday, referring to the company’s personal computer chip business.

Research firms IDC and Counterpoint both now expect global smartphone sales to shrink at least 2% this year, in a sharp reversal from their growth outlook a few months ago. That would mark the first annual decline in shipments since 2023.

The PC market is expected to shrink at least 4.9% in 2026, IDC estimated, after an 8.1% growth last year. Meanwhile, console sales are expected to fall 4.4% in the current year after an ⁠estimated growth of 5.8% in 2025, according to TrendForce.

TOUGH CHOICES FOR ‌MANUFACTURERS

While several firms have already raised prices, industry heavyweights Apple and Dell face a tough choice: take on the costs and sacrifice margins or pass them onto consumers at the risk of stifling demand.

“Manufacturers might absorb some costs but given the scale of the shortage, it is certainly going to ‍show up as higher prices for consumers,” Emarketer analyst Jacob Bourne said.

“It is going to result in more tepid consumer device sales in 2026. It will be a challenge for these companies that are trying to sell products during a time of broader inflation.”

Intel CEO Lip-Bu Tan said on Thursday that while larger device manufacturers could get their hands on more memory chips from their suppliers, smaller businesses were scrambling. “… they are ​missing the memory, they cannot complete the products,” Tan said on a post-earnings call.

The chipmaker forecast quarterly revenue and profit below market estimates on Thursday, sending shares down 13% in after-hours ‌trading. Rival PC processor provider AMD’s shares also fell 1.2%.