Why Gadgets Are Getting Expensive: The AI Chip Crisis Explained

The rapid pace of AI could make consumer electronics like phones and TVs more expensive. Data centers and servers are requiring more memory chips for AI infrastructure. This has led to a shortage of chip supplies for consumer electronics, which is expected to increase prices by up to 50%. A report by Counterpoint Research suggests that the prices of smartphones, TVs, computers, and other consumer electronics could rise by 7-10% per month this year.

Indeed, memory chip manufacturers are prioritizing high-bandwidth memory and server-grade DRAM because of their higher profitability. According to Counterpoint Research, major suppliers like Samsung, SK Hynix, and Micron are supplying large AI and server customers first. They have tightened order controls and are preventing stockpiling. This has reduced the availability of consumer-grade memory chips.

Memory chip prices have already risen by 400%.

Avneet Singh Marwah, CEO of Super Plastronics, a brand licensee for Blaupunkt and Kodak, said that DDR-3 and DDR-4 memory are used in smart TVs. However, due to AI demand, these memory chips are being diverted to servers. As a result, the price of memory chips in the international market has already risen by 300-400%.

Apple uses 25% of its chips and will put pressure on suppliers.

TV prices may increase by 7-10% this year - According to research reports, the situation is such that memory chip prices could increase by another 40-50% by March this year. This could lead to a 7-10% increase in TV prices. There is no hope for any improvement soon. The benefits of the reduction of GST from 28% to 18% in India have now been lost.

Phones from brands other than Apple may become more expensive. Smartphone company Nothing has stated that it will increase phone prices this year. However, according to analyst Ming-Chi Kuo, Apple will attempt to keep iPhone 18 prices stable. Apple uses 20-25% of the global memory chip supply and could put pressure on suppliers.

Computer brands are considering sourcing chips from China. Some global computer brands are exploring alternatives to traditional chip companies. Companies like HP, Dell, Acer, and Asus are considering sourcing memory chips from Chinese companies like CXMT. If this happens, prices of laptops, PCs, and tablets may also remain stable.

Rising prices are likely to reverse the trend toward larger screens.
TV consumer behavior may change. According to Plastronics' Marwah, people will replace 65-inch TVs with 55-inch TVs, or 55-inch TVs will shift to 43-50-inch TVs. The trend toward larger screens may reverse.

The graphics segment will be affected. Memory shortages have caused companies like Nvidia to delay the launch of some gaming chips. The auto sector has also been affected because cars also use semiconductors and memory.