Apple has raised the prices of its MacBooks and iPads by nearly 20% worldwide, blaming an “unprecedented challenge” in the electronics industry caused by an “extraordinary surge” in demand for chips to power AI data centres. The iPhone maker said on Thursday it had “never seen a component price increase this much, this quickly,” and warned it was working to find solutions.
Hours later, Microsoft’s Xbox announced it would raise the price of its basic console by $100 (£75) to $499, and the higher-memory version by $150, to $749 – its third price hike in just over a year. The new prices take effect from August. Xbox had already increased costs by $20-$70 in October, meaning a new console is now 30% to 40% more expensive than this time last year.
“Apple and Xbox raise prices up to 20% amid a chip crisis driven by AI data centre demand.”
“The entire consumer electronics industry is struggling with the current components crisis, but the effects are particularly hard on consoles,” Xbox said, adding it had “hoped another price increase would not be necessary”. The company warned that the cost of memory and storage – which has already more than doubled – is expected to double again by 2027, leaving the door open for further rises.
Tech analyst Paolo Pescatore called Apple’s move a sign that the “AI boom was now affecting consumer electronics”, demonstrating the scale of challenges “even for the world’s biggest technology companies”. Yang Wang, principal analyst at Counterpoint Research, described the memory crisis as “the most disruptive supply-side event the smartphone industry has ever faced”.
Much of the price surge is blamed on “Ramageddon” – a sharp spike in the cost of random access memory (Ram) driven by the proliferation of data centres needed for AI. The world’s largest chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC), which makes chips for Nvidia, AMD and Apple, has said inflation is pushing up its costs. Wendell Huang of TSMC did not rule out further price rises.
Apple’s share price tumbled after its announcement, part of a wider sell-off of tech stocks amid concerns AI investment would hit device sales. Consumers reacted with frustration. “Xbox with another hardware price increase? I gotta laugh to keep from crying,” wrote one X user. On Reddit, another user said Xbox “may as well just cancel” its upcoming console Helix “because no one will be able to afford it”.
Nintendo has said it will raise the Switch 2’s price globally from September. Valve recently launched its new Steam Machine gaming PC at a higher price than expected, starting with a long explanation about spiking component costs. It had already raised the cost of its handheld Steam Deck by 40% in May.
The iPhone has so far been shielded from price hikes, and Wang said premium phone makers such as Apple and Samsung were “better positioned to weather the disruption”. But for the rest of the electronics industry, as one analyst put it, the AI boom is now hitting wallets directly.