Tech firms are blaming AI for mega device and console price rises
Xbox consoles, Nintendo's new Switch 2 and Valve's Steam Deck are just some of the gadgets seeing price hikes in recent months.
By BBC News
Tech firms are blaming artificial intelligence for the sharp rise in prices of major gaming consoles and devices, with Xbox, Nintendo’s new Switch 2 and Valve’s Steam Deck among the gadgets seeing significant hikes in recent months. The root cause, according to companies like Apple and Microsoft, is the soaring cost of essential components—particularly memory chips—driven by the explosive demand for AI infrastructure.
Data centres powering AI operations are consuming chips at a rate that far exceeds current supply, creating a bottleneck that has pushed component prices skyward. Some industry observers have even dubbed the situation “Ramageddon,” as the cost of random access memory (RAM), once a cheap and stable part of device manufacturing, has more than doubled between October 2025 and early 2026.
By the first quarter of 2026, RAM prices had surged by 122%, reaching $282 per unit. Apple has already raised prices on its tablets and laptops by nearly 20%, while Microsoft followed shortly with a price increase of at least $100 on its five-year-old Xbox S console.
These changes, set to take effect in August, mark the third price hike in just over a year for new consoles, which are now 30% to 40% more expensive than they were a year ago. Analysts interpret Apple’s move as a sign that the financial impact of massive AI investments is finally being felt across the tech sector.
The competition for chip production capacity is intense. Major tech firms including Alphabet, Amazon, Meta and Oracle—known as “hyperscalers”—are building thousands of new data centres to support AI services, and they are placing orders for memory chips at a rate 15 times higher than available supply.
This has empowered chip manufacturers like TSMC to raise prices, knowing customers are desperate to secure production slots. The shortage is not expected to ease soon.
Tech analysts and economists predict the chip crunch will persist through at least 2027, as expanding or building new semiconductor plants takes considerable time. In the meantime, consumers are likely to see continued price increases, especially heading into the holiday season.
Gartner forecasts that PC and smartphone prices could jump 17% and 13% respectively this year compared to 2025 levels, driven entirely by rising chip costs. The impact is already visible across the industry.
Microsoft, Apple and other giants are passing higher manufacturing costs directly to consumers, with some analysts suggesting Apple may also raise iPhone prices to offset the strain. The situation is described as far worse than the supply disruptions seen during the pandemic, when factory closures temporarily halted production.
While AI has delivered transformative advances in computing, its infrastructure demands are now reshaping the economics of consumer electronics. The race to build AI data centres is creating a shortage that the global supply chain cannot accommodate, and the result is a new era of higher prices for everyday devices.
For gamers and tech users alike, the cost of staying up to date is rising sharply, and the trend is unlikely to reverse in the near future.