Global demand for smartphones, personal computers and video game consoles is expected to decline this year, as companies from Britain’s Raspberry Pi to HP Inc raise prices to offset rising costs of memory chips.
The rapid expansion of AI infrastructure by U.S. tech companies such as OpenAI, Google (owned by Alphabet) and Microsoft has absorbed much of the global supply of memory chips, driving up prices as manufacturers prioritize higher-margin data center components over consumer devices.
Samsung, SK Hynix and Micron, the world’s three largest memory chip producers, have indicated in recent months that they are struggling to meet demand, although they reported positive quarterly profits thanks to rising prices for their semiconductors.
However, the price increase is passing through to consumer markets.
Research firms IDC and Counterpoint now expect global smartphone sales to decline by at least 2% this year, a sharp decline from their growth projections from a few months ago. This would mark the first annual drop in shipments since 2023.
The PC market is expected to shrink by at least 4.9% in 2026, IDC estimated, after growth of 8.1% last year. Meanwhile, console sales are projected to fall 4.4% in the current year, following an estimated 5.8% growth in 2025, according to TrendForce.
While several companies have already raised prices, industry giants such as Apple and Dell face a difficult decision: bear the costs and sacrifice margins or pass them on to consumers, at the risk of slowing demand.
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“Manufacturers could absorb some costs, but given the magnitude of the shortage, it will certainly be reflected in higher prices for consumers,” said Emarketer analyst Jacob Bourne.
“This will result in more moderate sales of consumer devices in 2026. It will be a challenge for these companies trying to sell products in a context of widespread inflation.”
The pressure is reinforced by expectations that price increases will continue, possibly into next year. Counterpoint estimates that memory prices will rise between 40% and 50% in the first quarter, following a 50% increase last year.
“Over the last two quarters, we have seen 1,000% price inflation on some products and the trend continues upward,” said Tobey Gonnerman, president of semiconductor distributor Fusion Worldwide.
“Consumers can expect to pay significantly higher prices for laptops, mobile phones, handheld devices and video game consoles very soon.”
Analysts believe the impact will be most pronounced for low- and mid-range device makers, such as Chinese smartphone makers Xiaomi and TCL Technology, as well as PC company Lenovo.
TrendForce indicated last year that Dell and Lenovo were planning price increases of up to 20% in early 2026.
Shares of Raspberry Pi, Xiaomi, Dell, HP Inc and Lenovo fell in the last three months of 2025, with Xiaomi recording the biggest drop, of 27.2%.
HP CEO Enrique Lores said in November that the company would raise PC prices due to the “significant” costs of memory chips, while the Raspberry Pi CEO called the cost increase “painful” in a blog post in December, announcing price increases for its devices.
The prospect of lower demand could also hurt sales at electronics-focused retailers such as Best Buy, which warned last year that tariff-driven price increases could deter potential buyers.
Apple will report earnings on January 29, while Dell is scheduled to report earnings on February 26. Xiaomi usually reports at the end of March.
Apple’s market power
Some analysts indicated that Apple, thanks to its scale, pricing power and extensive supplier network, is better positioned to deal with rising memory chip prices than its smaller competitors.
The company typically keeps prices for its main line of iPhones in the US stable between launch events in September. Last year it absorbed hundreds of millions of dollars in tariff-related costs, rather than passing them on to customers.
“Apple is better positioned as it uses contract prices (rather than more volatile spot prices) for its purchases, ensuring better prices,” said Morningstar analyst William Kerwin.
“But it is not immune and may need to increase prices to pass on higher input costs.”
With information from Reuters
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