Why tech firms are blaming AI for the massive surge in device and console prices

Major tech companies are defying convention after a long trend of consumer hardware getting cheaper over time, that trajectory now seems to have completely reversed.

Recently, Apple and Microsoft Xbox have begun raising prices for devices and games that are already several years old. 

Other tech companies have pointed to the rising cost of significant components needed to build their devices , laying the blame on AI. 

Some people are calling it “ Ramageddon”-as random access memory, a once-cheap part of any computer, has now skyrocketed in price. However, Big Tech’s Ram excuses have failed to elicit compassion from many consumers facing unreasonably high and unfair pricing.

Microsoft has reportedly announced that it will raise the prices of its Xbox game consoles, marking a significant shift, hours after Apple declared price hikes for MacBooks and iPads.  

This major move will be implemented on August 1. The Xbox Series S console containing a massive 512GB of storage drive will go up by $100 to about $500. 

Consequently, 1TB models will increase by $150, while the entry-level Xbox Series X will now start at about $750.

The US company said in a blogpost: “The XBOX console prices were increased by $20-$70 in the US.”

Microsoft further clarified that this price increase would not be a sudden decision, adding that the company had spent the last several months working with suppliers on alternative options.

Why is this happening? 

On Thursday, Apple’s announcement cited these price hikes and the formidable barriers facing the memory chip industry. Several analysts are demonstrating that the massive financial cost of AI investment is finally hitting home. 

Meanwhile, it is no secret that AI developers remain buzzed about generative AI tech, claiming it will drive massive efficiency gains and boost corporate profits. 

Can we just blame AI for this?

UK’s senior analyst James Bull, the four largest US tech firms are expected to spend hundreds of billions of dollars on data centers in 2026. 

He said: “That level of demand for memory chips has created a shortage the supply chain cannot keep pace with.”

“The race to build out AI data centres is resulting in a swift and significant increase in demand that chip makers are rushing to meet,”said Danni Hewson, head of financial analysis at investment firm AJ Bell.

Prominent technology and AI firms are able to pay massive commitment fees for longer contracts, which motivates manufacturers to prioritize AI infrastructure over consumer electronics. 

It has been observed that some big tech companies, such as Microsoft have a foot in both camps investing billions in AI infrastructure. Consequently, memory storage and subsequent price surges have also been exacerbated by inflation and ongoing geopolitical issues. 

Micron’s boss Sanjay Mentora told investors on Wednesday: “Even as we expect industry supply to improve gradually in 2028, we currently do not have line of sight as to when memory supply will be able to catch up with increasing demand.”

Some have been more skeptical about big tech firms reaping billions in annual revenue. 

Nonetheless, the AI boom has created a colossal windfall for particular chip makers, including American company, Micron, whose quarterly revenue recently increased more than fourfold.