Consumer electronics have been getting more expensive, and the suspect is no mystery. Rising memory costs, driven by AI infrastructure’s insatiable appetite for DRAM and NAND, have been pushing up prices across smartphones, laptops, tablets, and gaming consoles for over a year. Analysts had suggested things might start improving by 2027, which was already a long wait for most buyers. But memory makers may have found a way to keep prices elevated well past that.
Recently, Micron Technology, one of the world’s largest memory makers, disclosed during its latest earnings call that it had signed 16 strategic customer agreements with buyers across data centres, consumer electronics, and the automotive sector. Most of these agreements run from 2026 through the end of 2030, structured as take-or-pay contracts that bind customers to purchase specific volumes of DRAM and NAND at prices within a defined floor and ceiling band. The floor price, CEO Sanjay Mehrotra said, enables gross margins well above the company’s peak quarterly margins in any previous cycle.
These are not projections. They are contracts. And for consumer electronics companies sourcing memory for their products, they signal that the cost environment for the rest of the decade has effectively been set.
Navkendar Singh, Associate Vice President at IDC India, told Business Standard that the development was concerning but not surprising. “Our assumption is, across devices, the memory impact will not soften till 2028, but we’re not surprised if it goes on till 2029-30,” he said. The holding cycle of devices, he added, will go up, and India should not expect meaningful growth across consumer electronics categories for the next two to three years.
How it started
The origins of the current crisis lie in a structural reallocation of memory supply that began accelerating in 2024. As AI infrastructure spending surged, data centres running large language models began consuming high-bandwidth memory, or HBM, a specialised form of DRAM, at a scale the industry had not anticipated. Memory manufacturers including Samsung and SK Hynix, recognising that HBM carried substantially better margins than general-purpose DRAM and NAND, began redirecting cleanroom capacity accordingly.
The result was a supply squeeze on exactly the memory that goes into consumer devices. LPDDR for smartphones. DDR5 for laptops and PCs. NAND for storage across virtually every product category.
How it progressed
Through the first half of 2026, the cost pressure began surfacing across the consumer market in ways that were hard to miss.
As reported in May, the Indian smartphone maker, Lava, told Business Standard that memory, which used to account for around 15 to 20 per cent of a smartphone’s total cost, had reached near parity with the rest of the bill of materials.
Several smartphone brands such as OnePlus, Vivo, Samsung and Nothing adjusted pricing across segments.
Beyond smartphones, several Apple Mac Studio, Mac mini, and MacBook configurations were quietly delisted or showing delivery windows stretching to four or five months in India, with higher-memory variants disappearing first.
However, the tipping point arrived more recently when Apple acknowledged the new price reality. In an interview with the Wall Street Journal, Apple CEO Tim Cook said price increases were unavoidable. “We’re doing our best to mitigate the huge increases that are being passed to us, and we’ve been trying to shield our customers from the increases, but the situation has become unsustainable,” Cook told the Journal.
What followed made Cook’s words concrete. Apple formally raised prices across iPads, Macs, MacBooks, and Home products on June 25. In India, some high-end MacBook Pro models saw increases of up to Rs 1,00,000. The base iPad went from Rs 34,990 to Rs 49,990. Home products saw some of the steepest proportional increases, with Apple TV 4K prices nearly doubling across variants.
Microsoft followed suit. The company’s gaming division announced that Xbox console prices would increase by $100 for 512GB models and $150 for 1TB models, effective August 1. Meanwhile the company discontinued the 2TB variant entirely.
Why Apple price hike matters
Apple ships approximately 247 million iPhones a year and accounts for an estimated 20 to 25 per cent of global smartphone memory demand, according to analyst Ming-Chi Kuo. Its negotiating leverage with memory suppliers is among the strongest of any consumer electronics company in the world. As Business Standard has previously reported, Faisal Kawoosa, Founder and Chief Analyst at Techarc, described Apple as not just a tier-one customer for its supply chain but a marquee one, well cushioned by both negotiating power and cost structure compared to most brands.
When Apple says the situation has become unsustainable and begins passing costs to customers, the signal to the rest of the market is unambiguous.
Akis Evangelidis, co-founder of Nothing, captured the industry’s mood precisely. Commenting on the Bloomberg report of Apple’s price hikes in a post on X, he wrote simply: “Even Apple.”
Nothing had already said it would not launch its budget CMF phone model this year because the pricing would not make sense, and had raised prices on existing models.
How OEM’s have tried to curb pricing
According to market intelligence firm TrendForce, memory buyers had started turning to legacy components, including DDR2 and DDR3, to secure supply allocations, with some hardware makers redesigning products to use older memory generations to control costs. It was a temporary fix that did not last long. TrendForce estimated that DDR2 contract prices rose approximately 55 to 60 per cent in the second quarter of 2026, with a further 35 to 40 per cent increase expected in the third quarter. A shortage that began with cutting-edge HBM had worked its way back to components considered obsolete.
The 2030 signal
While announcing a price hike for Xbox consoles, Microsoft added a data point that reframed the timeline entirely. The company said that the price hike was due to more than 2.5 times increase in console storage and memory prices. It then added: “We expect another doubling by the fall of 2027.”
That contradicted the working assumption across much of the industry. Microsoft’s position is particularly notable because consoles are typically sold at or below cost, a fact the company itself acknowledged during the 2021 Epic Games v. Apple trial. Its projection of a further doubling was not a hedge. It was a warning from a buyer with direct visibility into its own supply chain.
The Micron disclosures gave that warning a structural foundation. Beyond the contractual architecture outlined earlier, Micron said it expects to receive $22 billion in cash deposits from customers under agreements signed so far, and that supply-demand conditions for both DRAM and NAND will remain tight beyond calendar 2027. The company also noted that technology transitions, from LP5 to LP6, DDR5 to DDR6, and newer generations of HBM, all carry rising cost per bit, meaning even as capacity gradually improves, the blended cost of memory is projected to rise from current levels.
What analysts are saying
While talking to Business Standard, IDC’s Singh pointed to what makes this cycle structurally different from previous memory downturns. “Typically, memory has been a cyclical industry. Every 10 years, there’s a cycle, just like a commodity. But this time it’s slightly different, because permanent capacity allocation is being done to some other technology,” he said, referring to HBM demand from AI data centres. The only scenario in which that changes, he noted, is if AI data centre demand for high-bandwidth memory slows down, which he described as unlikely as of now, or if meaningful new capacity comes online, which takes years. “So I’m not surprised that in 2030, the market will obviously be impacted,” he said.
He did offer a more measured view on how consumer behaviour may adjust over time. “There’ll be a recalibration of the pricing in the minds of the consumer, that prices are not coming down now. So if that starts happening, essential devices like phones will start getting less impacted 2027 and 2028 onwards.” But he was direct about the broader category outlook. “The rest of the products, I think, will see a larger impact and we might find a floor. The holding cycle of the device by consumers, in terms of device replacement, will go up and we should not expect those kinds of growths across categories, at least in a market like India, for the next two, three years.”
