Apple and Microsoft Raise Prices as AI Demand Squeezes Memory Chips

Apple and Microsoft announced price increases on Thursday, blaming a surge in the cost of memory and storage chips driven by demand from artificial intelligence data centers. Apple raised prices on certain MacBooks and iPads by as much as $300, CBS News reported, while NBC News put the largest increases at $200. Microsoft said it will raise prices for its game consoles starting Aug. 1, by $100 for models with 512 gigabytes of storage and by $150 for 1-terabyte models, CBS reported.

“We have never seen a component price increase this much, this quickly,” Apple said in a statement. “We have shielded our customers from these increases so far, but we have now reached a point where we need to begin raising prices.” Apple did not raise prices on iPhones, Apple Watch or AirPods, according to NBC. CBS reported that the budget MacBook Neo, which Apple introduced this year at $599, now starts at $699. Apple’s online store briefly went offline Thursday morning as the changes went live, CNBC reported.

Apple chief executive Tim Cook told The Wall Street Journal last week that price increases had become unavoidable, calling the situation “a hundred-year flood” and saying he had not seen anything like it in more than 40 years, according to CNBC and CBS. Analysts expect more increases. “The storm isn’t over yet; this is just the beginning,” Nabila Popal of International Data Corporation told CBS, adding that Apple is likely saving iPhone increases for later. Counterpoint Research analyst Tarun Pathak estimated to CNBC that higher component costs could add roughly $200 per iPhone.

Investors reacted sharply. Apple’s stock closed down 6.12 percent, its worst day in more than a year, wiping out about $265 billion of market value that remains above $4 trillion, NBC reported. Memory and storage prices have quadrupled over the past three quarters, according to Counterpoint Research cited by CNBC, as suppliers steer capacity to the high-bandwidth memory used in AI servers.

Microsoft said console storage and memory prices have more than doubled and are expected to double again by fall 2027, according to NBC and CBS. “The entire consumer electronics industry is struggling with the current components crisis,” the company said. CBS noted that Microsoft had already raised console prices last year.

The memory market is dominated by a handful of producers, Samsung, SK Hynix, Kioxia, Micron and Sandisk, NBC reported, which is why supply is so tight. Micron said Wednesday that its quarterly revenue had quadrupled and that its gross margin reached 84.9 percent, CNBC reported. In December, International Data Corporation called the memory market an “unprecedented inflection point” and predicted the shortage could last “well into 2027,” CBS reported. CBS said personal computers are seeing higher prices for the first time in decades.