Tech companies are getting scared about RAMageddon

If you’ve listened to CEOs of big tech companies over the past two weeks, you wouldn’t be wrong in thinking that the second half of 2026 will be painful thanks to competing demands on utilities that make components for consumers. Laptops, Smartphones, External storage devices, Gaming consoles And more.

“RAMageddon” – the name associated with the current shortage of memory supplies and the resulting inflation – is at the forefront of everyone’s minds, but the shortage we are witnessing is really about anything created in the world of… Semiconductor Fab. This is because great resources have been or are expected to be reallocated towards what is ultimately most profitable. Right now, that means anything critical to AI — or anything with the name AI on it. This pressure extends throughout the supply chain.

For this reason, Apple CEO Tim Cook pointed to “the availability of the advanced nodes on which our processing cores are produced” (referring to the M and A series processors) as one of that company’s biggest problems. She’s even considering the options Beyond its long-term supplier, TSMC, to the Samsung and Intel fabs. Apple is having real problems, with System configurations disappear quickly.

Cook raised the components crisis during Apple’s quarterly earnings call with financial analysts last week. Most major tech companies have received these calls in the past two weeks, and what executives like Cook said paints a bleak picture of how this supply squeeze will impact consumer device prices in the months and years to come.

While console buyers are feeling the pinch now with console and system prices rising, things are likely to get worse before they get better. There are three main memory manufacturers – Samsung, SK Hynix, and Micron – and Samsung said It has already sold its production capacity until the end of 2026. Micron left the consumer RAM business In 2025.

AMD, which supplies the chips in consoles as well as consumer CPUs and GPUs across the board, He said in his invitation It expects gaming revenue to decline by 20% in the second half of the year compared to the first half, and it has already seen a slowdown in desktop PC sales due to memory and component prices. Microsoft also expects Personal computer sales decline thanks to increasing memory costs. For desktop computers in particular, Memory price charts For a while it looked like the typical hockey stick of fantasy profit expectations, although it seems to have stabilized for now.

Higher prices mean companies expect to sell fewer products. “Restrictions and higher prices around key components such as memory, chips and substrates are driving up costs that could impact demand for our products at some point in the year.” said Intel CEO Lip Bo Tan.

One potential bright spot for PC makers is business-focused devices designed to run artificial intelligence tools. “We are making very good progress in the business PC space with AI-powered PCs,” said Lisa Su, CEO of AMD.

How do companies respond to rising prices? Often times, they will look for other features to attract consumers’ attention. “Looking at other pieces of technology and computing, it could be screen size, screen quality, some of the AI ​​features, but really other things that will drive interest into this category and offset some of the pressure that we’ll see from an overall memory perspective,” Jason Bonfig, Best Buy’s senior executive vice president and chief customer, product and fulfillment officer, said during the conference. Company call in March.

What is rarely mentioned when companies push AI at the expense of more memory, is that any job that involves information from a lot of sources on your system, collects the results of multiple steps in an agent flow or loads a medium-sized LLM requires more memory. Microsoft admitted to me that even though my basic Windows Copilot Plus PC has 16GB of RAM, you really need 32GB to do any substantive AI-related tasks.

So when does RAMageddon arrive in full force? “I think we’re already starting to see some costs, some prices go up because of memory in some small portions of categories,” Matt Bellonas, senior vice president and chief financial officer of Best Buy, said in what appears to be a major understatement. “It’s starting a little bit.”

But this company is still in the process of selling through existing inventory, so this perspective makes some sense. “In computing, you’ve actually seen less cost increases and more of an overall slight decline in promotions from compute vendors, which is the first thing they’ll do given this memory situation,” Bellonas said.

Timothy McGrath, president and CEO of retailer PC Connection, commented in his call, “It’s really clear that the memory shortage is going to continue to drive inflation. What we’re seeing with this inflation is that the price is going up and, in some cases, the number of units is going down. However, the inflated prices are only slightly more than offsetting the decline in units, at least at this time.” In other words, as the volume of products decreases, prices are likely to rise further to compensate.

Secondary effects of deficiency

The changing mix of available products favoring premium laptops, desktops and more over more affordable models means we’re not just seeing price increases driven by supply or demand. This means that the few components that consumer electronics manufacturers have are likely to be incorporated into their higher-margin (in other words, more expensive) products, resulting in a secondary inflationary effect. Until there is more manufacturing capacity, it is a zero-sum market.

“If you had to choose between devices that you put your memory allocation on, you would choose the premium tier and the premium tier. That’s where the profitability lies, and that’s what you see happening in the market,” Qualcomm CFO Akash Palkhwala said. During that company call.

It’s not just about price for suppliers either. It’s also about revenue stability. SanDisk, which makes solid-state storage units, is more inclined to favor multi-year agreements with its customers than in the past. “Other clients are coming into the conversation very used to the way the market has worked in the past, where they stick to, you know, volume and want to negotiate the price every quarter. That’s not the type of agreement we’re interested in,” CEO David Goeckeler said. SanDisk Call.

These customers are consumers of large amounts of SSD – enterprises and data centers. Companies building data centers to fuel AI have the luxury of agreeing to multi-year commitments, because their bills are not yet due. Consumer hardware sales fluctuate a lot for these types of contracts. Gokeler believes that the demand for more storage capacity in phones is rising this year. “Now what will we save? That’s an interesting question.” Goeckeler answered himself. “We will supply customers with whom we have agreements. This is how we started looking at the market.”

SanDisk, on the other hand, is a consumer of dynamic random access memory (DRAM), the most common type of memory for computers and other electronic devices. They did I invested in Nanyaa supplier of LPDDR5X memory widely used by laptops and mobile devices, to ensure “preferential treatment regarding access to DRAM,” according to CFO Luis Felipe Visoso. This tightens the supply further for the products you buy.

The lack of ingredients also has a ripple effect. Businesses don’t want to stock a lot of inventory when they’re equipped with parts in short supply and at fluctuating prices, and instead focus on just-in-time stocking, which exacerbates the problem of finding the electronics you’re looking for, let alone at prices you can afford.

Even products you may not consider affected are left untouched. Rocco, making TV broadcasting devices and operating systems (also His TV), and it cannot be ignored either. on Earnings callHigher memory prices and lower retail prices mean shrinking profit margins for streaming device manufacturers, said CFO and Chief Operating Officer Dan Jeddah. “No one knows what will happen to memory prices after this year or how the CTV market will react.

Tom Conrad, CEO of speaker maker Sonos, provided more details on his company’s position, explaining that the pressure on AI demand for DDR5 and high-bandwidth memory is accelerating the production shift from DDR4. “This is tightening supply of the DDR4 chipsets we use and increasing costs across consumer electronics. Our global operations team has been focused since early 2025 on securing sufficient supply to support our manufacturing requirements.”

The real question is how long this will last. Suppliers and partners have a wide range of guesses, said Thomas Baker, PCC’s senior vice president and chief financial officer. He said: “Some people say until 28 and 29, others say until 26.” “So I think it’s a bit of a wait and see thing.”

Yes, we don’t know either.