The escalating costs of crucial components, particularly RAM chips, are significantly driving up the total price of new computing devices.
Analysts indicate that unprecedented PC price increases are expected to persist for an extended period, leading numerous businesses to defer planned hardware upgrades.
According to Gartner analyst Ranjit Atwal, interviewed by Computerworld, PC prices for both corporate and individual purchasers are projected to rise by approximately 17% this year. Furthermore, a Gartner study released last week predicted the complete disappearance of the sub-$500 consumer PC within the next few years.
These significant cost escalations stem from an increase in memory chip prices, essential for artificial intelligence applications. Production capacity for memory is currently being redirected towards more profitable chips for AI servers, resulting in a scarcity of more affordable memory components for smartphones and PCs.
Atwal explained that the elevated costs of memory and other components are anticipated to decelerate upgrade cycles, as personal computers become more expensive and companies extend the lifespan of their existing hardware.
Businesses considering an upgrade to AI-enabled PCs might postpone their purchases, hoping for price reductions, Atwal noted. However, given the likelihood of persistently high prices, organizations may find themselves needing to acquire computers with scaled-back specifications.
“While AI PCs were initially projected to become more affordable, their prices are now expected to rise in 2026, hindering their widespread adoption,” Atwal stated.
A multitude of new processors designed for AI PCs are nearing release. Intel introduced its forthcoming PC chip, Panther Lake, in January, while AMD revealed new AI PC chips within its Ryzen series. HP and Dell are scheduled to disclose further information regarding laptops featuring these new chips in March.
Nonetheless, even manufacturers of personal computers are finding it challenging to control laptop pricing. Karen Parkhill, HP’s chief financial officer, reported during a recent earnings call that memory prices “have approximately doubled compared to the previous quarter.”
Parkhill explained that memory now constitutes 35% of PC manufacturing expenses, which is twice the historical average. She further elaborated on the comparative costs, stating that “In the last quarter, memory and storage expenses represented approximately 15% to 18% of our PC bill of materials.”
Initially, analysts had forecasted a surge in AI application usage on PCs this year, driven by security-conscious firms aiming to reduce cloud expenditures. However, AI tools perform poorly on PCs lacking sufficient memory. Consequently, AI PCs, according to Jack Gold, principal analyst at J. Gold Associates, will transition from being a perceived necessity to a “desirable but not essential” item.
Gold emphasized, “For contemporary systems, decreasing the installed memory capacity is not a viable choice, as it would severely compromise performance, particularly for AI functionalities.”
Businesses are expected to lengthen their upgrade cycles, acquiring fewer new machines and retaining their current ones for longer periods, with the expectation that prices might stabilize. Nevertheless, this particular upgrade cycle is distinct, and PC costs are not projected to decrease.
“The challenge concerning memory is poised to be a protracted issue,” Gold remarked.
While companies typically engage in negotiations with suppliers for substantial purchases, vendors have finite capacity to absorb costs within their profit margins. “Indeed, this situation will impede upgrades as PCs become pricier and organizations retain their computers for extended durations,” Atwal commented.
Given that price hikes appear to be permanent, the critical question now is the timeframe required for businesses to adjust their PC procurement budgets upwards.
