With product costs going up, Apple has pointed to strong demand for storage and memory chips as the issue. “RAMageddon” is a term used to describe the shortage, with Apple blaming the rapid expansion of AI infrastructure.
Currently, Apple doesn’t plan to increase iPhone prices, but it might in the future. The company has seen up to 33% increases for some devices, and Microsoft device prices have also soared. Looking ahead, gaming equipment is expected to cost more as well.
Hitendra Chaturvedi, W. P. Carey School of Business Professor of Practice, joined “Arizona Horizon” to discuss the rising demand for chips.
Chaturvedi said the surge in A.I. has shifted the memory chip market. Just a few years ago, manufacturers struggled to sell inventory. Now, he said, companies have committed roughly $750 billion toward AI infrastructure, including servers that require massive amounts of high-performance memory.
“Everybody seems to be blaming everything on AI, but this one really is about AI,” Chaturvedi said. “That’s where you are hearing a sucking sound of memory requirement, and that’s what’s causing one of the biggest reasons for AI’s demand for memory chips.”
Roughly three companies control the global memory chip market: Samsung, SK Hynix and Micron. According to Chaturvedi, manufacturers are prioritizing production of high-bandwidth memory, which is used in AI systems and generates higher profits than standard RAM.
As a result, traditional memory used in personal computers has become more expensive. Chaturvedi said a standard 32-gigabyte RAM module that cost about $85 in 2024 now costs more than $400, making memory one of the most expensive components in computers.
Rather than halting innovation, Chaturvedi said manufacturers are expected to reduce memory specifications while keeping prices relatively stable.
“If they were selling you a $1,000 PC with 32 gigabytes of RAM, they would tune it down. They will give you 16 gigabytes of RAM for $1,000,” he said. “Your machine now is going to be slower.”
The shortage is expected to last for years because building a new chip fabrication plant can cost around $20 billion and can take years to complete. Chaturvedi said meaningful price relief may not come until 2028 at the earliest.
