Apple’s recent product launch, featuring its first folding phone, has also revealed a significant price increase across its entire iPhone lineup, including older models. The move, which adds roughly £100 to the cost of each device, is attributed to a widespread shortage of memory chips, a phenomenon dubbed “RAMageddon.” This shortage has disrupted a longstanding trend of declining electronics prices.
The surge in demand for memory chips is largely driven by the rapid expansion of artificial intelligence (AI) data centers, which are consuming vast quantities of these components. As a result, prices for key chips have soared, in some cases increasing fivefold compared to previous levels. This has led to higher manufacturing costs for smartphones and other electronics, which manufacturers are passing on to consumers.
Francisco Jeronimo, vice-president of client devices at IDC, explained that memory costs alone have risen more than 300% year on year. He noted that even older iPhone models now incorporate the same expensive memory as newer ones, prompting Apple to align their prices accordingly. Similar post-launch price adjustments have been observed among other smartphone makers such as Samsung and Google, which have raised flagship phone prices by up to £80.
Apple has also increased the cost of its refurbished iPhones by £60 to £70, including older models such as the iPhone 15, which is no longer sold new. However, data from Uswitch indicates that prices in the third-party refurbished iPhone market have remained relatively stable, with some models even slightly declining in price over the summer.
The price surge has been more pronounced at the lower end of the smartphone market, where many manufacturers have discontinued older models due to the high cost of components making them economically unviable. IDC forecasts a nearly 17% decline in global smartphone sales for 2024, with consumers purchasing fewer devices while facing higher prices on those they do buy.
Beyond phones, the shortage and rising costs of memory chips have also affected the broader electronics industry. PC manufacturers, more heavily exposed to fluctuating memory costs, have increased prices multiple times over the past 18 months. For example, Microsoft raised prices on some Surface laptops by up to £220 and has released versions with reduced memory to offer lower price points. This shift has prompted efforts to optimize Windows to run efficiently on only 8GB of RAM.
Other companies, such as Dell and Framework, have also adjusted prices significantly. Apple followed suit in June by raising prices on its MacBook Neo and across most Mac and iPad models. Microsoft recently increased the price of its Xbox console to £670, citing storage and memory costs rising by more than 2.5 times, with expectations of further increases by 2027.
Industry analysts warn that these elevated component costs are unlikely to subside soon. Major chip producers like SK Hynix have indicated the shortages may persist until after 2030. Jeronimo forecasts continuing memory price increases through at least 2027, and suggests smartphone prices will not return to previous lows.
Once price increases are incorporated into manufacturers’ margins, they are typically sustained, with companies opting to add value through enhanced features or storage rather than reducing sticker prices. For consumers, this signals an end to the era of inexpensive smartphones and electronic devices, as the sector adjusts to a new reality of constrained component supply and rising costs.