Storage prices have skyrocketed, and consumer electronics products may see price increases of up to 20% this year

Due to the surge in storage chip prices driven by demand for artificial intelligence, consumer electronics manufacturers warn that product prices may rise by 5% to 20% this year. From smartphones and computers to home appliances, consumers will face widespread price pressure.

Consumer electronics manufacturers, including Dell, Lenovo, and Xiaomi, have issued consecutive warnings, indicating that chip shortages and soaring costs are forcing them to adjust their pricing strategies. Dell's Chief Operating Officer Jeff Clarke stated during the earnings call in November that the company has never seen costs rise at such a pace, and the impact will inevitably be passed on to consumers.

The expectation of price increases has become a consensus, but there are differences in the specific magnitude. Macquarie analyst Daniel Kim predicts an increase of 10% to 20%, while CW Chung, co-head of Asia Pacific equity research at Nomura Securities, expects an increase of 5%. The chip shortage has led companies to start stockpiling chips, which will further drive up semiconductor prices.

AI Data Center Demand Squeezes Consumer Market

The global data center construction boom is causing a structural tilt in the semiconductor supply chain. The urgent demand for cutting-edge high-bandwidth memory (HBM) chips used in AI servers has prompted chip manufacturers to concentrate their production capacity and R&D resources in this high-value-added area, relatively lowering the production priority of traditional DRAM and other mid-to-low-end semiconductors used in consumer electronics. This has led to a shortage of dynamic random-access memory chips widely used in products such as automobiles and computers.

Market research firm TrendForce predicts that the average price of DRAM, including HBM chips, will increase by 50% to 55% quarter-on-quarter in the fourth quarter of 2025. Samsung and SK Hynix, the two largest storage chip manufacturers controlling 70% of the DRAM market, stated that orders for 2026 have already exceeded capacity. Last month, Samsung raised the prices of some storage chips by 60%.

Samsung executive Kim Jae-june stated during the earnings call in October: "The demand for AI-related servers continues to grow, significantly exceeding industry supply."

Tech Giants Lock in Long-Term Supply

Consumer electronics manufacturers are being forced to accept significantly elevated chip procurement costs, with their bargaining power structurally squeezed. The core reason is that large-scale cloud service providers like Amazon and Google are locking in substantial production capacity from chip manufacturers through long-term agreements to ensure the supply of DRAM needed for their AI servers, which directly diverts semiconductor resources originally intended for the consumer electronics sector.

Morgan Stanley expects that spending by large U.S. tech companies on AI infrastructure will surge from $470 billion in 2025 to $620 billion in 2026, and predicts that by 2028, global cumulative spending on AI data centers and related hardware will reach $2.9 trillion.

In the face of a persistently tight supply situation, Citigroup analyst Peter Lee pointed out:

"The demand for AI data center inference far exceeds expectations and has depleted chip inventories for PCs and smartphones. Supply will remain tight until 2027, with no additional capacity expected. The chip stockpiling situation will become more severe in 2026."

Manufacturers' Strategies Vary

In the face of ongoing semiconductor supply chain pressures and rising costs, major global consumer electronics manufacturers have adopted differentiated response strategies, with the core being strategic stockpiling and prudent price transmission.

The world's largest personal computer manufacturer, Lenovo, is actively stockpiling memory chips and other key components to buffer supply risks. Its Chief Financial Officer, Winston Cheng, confirmed this strategy in an interview with Bloomberg in November. UK personal computer manufacturer Raspberry Pi bluntly stated that cost pressures are "painful" and announced a price increase for its computer products in December.

In the smartphone sector, Xiaomi raised prices for its flagship product line in October. Company President Lu Weibing further warned in November that supply chain pressures expected in 2026 will be "far greater" than those in 2025.

Macquarie analyst Daniel Kim issued a more severe warning, pointing out that if the situation worsens, the worst-case scenario could be "a severe supply chain disruption similar to that during the pandemic."

New Capacity Difficult to Resolve Short-term Dilemma

To address the ongoing chip shortage, South Korean semiconductor giants are accelerating capacity expansion. Samsung Electronics announced in November that it will add a new chip production line at its Korean factory; SK Hynix is advancing its chip manufacturing cluster construction with a total investment of $91 billion, announced in 2024. SK Group Chairman Choi Tae-won candidly stated at a company event in November: "We are seriously considering how to meet all demands."

However, the release of this new capacity will take time. An industry executive in Seoul pointed out: "We are doing our utmost to increase supply, but building an advanced chip manufacturing plant takes at least two to three years." This means that in the medium term, the structural supply tightness is unlikely to fundamentally ease.

During this window period, companies' choices will be constrained. As Citigroup analyst Peter Lee summarized, manufacturers will have to face a difficult trade-off: either pass the rising cost pressures onto consumers or absorb the erosion of profit margins themselves