The aggressive expansion of artificial intelligence infrastructure by tech giants such as Google, Microsoft and OpenAI is claiming an unexpected victim: the consumer electronics market. The massive buyout of memory chips by data centres has drastically reduced their supply to the rest of the market. As a result, smartphone and computer manufacturers, forced to scramble for components, are facing the need to pass on rising costs to customers. This in turn, analysts predict, will chill global demand in the coming quarters.
Samsung, SK Hynix and Micron – the three largest players in the memory market – are reporting record results, benefiting from the priority margins offered by the AI sector. However, for consumer equipment manufacturers, the situation is becoming critical. Counterpoint estimates that memory prices will increase by another 40-50% in the first quarter, following drastic increases last year. Tobey Gonnerman of Fusion Worldwide even points to 1000% price inflation for some specific components, making it impossible to maintain existing retail price lists.
The effects are already visible in sales forecasts. IDC and Counterpoint have revised their optimistic assumptions of a few months ago, now rallying the smartphone market to a contraction of at least 2%. The outlook is even worse for the PC sector, which is expected to see a decline of nearly 5% in 2026, and for games consoles. Companies such as HP Inc. and Raspberry Pi have already announced increases, calling cost increases “painful”. Dell and Lenovo, on the other hand, are considering price adjustments of up to 20%, putting their sales volumes in question in the face of inflation still being felt by consumers.
The biggest challenge faces brands competing on price, such as Xiaomi and TCL, which do not have a margin buffer to absorb costs. Apple is in a slightly better position. Thanks to its scale of orders and long-term contracts, the Cupertino-based company is able to partially bypass the turbulence in the spot market, although analysts warn that even the iPhone manufacturer is not completely immune to such a profound supply shock. 2026 therefore promises to be a period of difficult choices: manufacturers will have to balance protecting profitability with the risk of scaring off customers, which for retail chains such as Best Buy could mean further challenges in generating revenue.
