Apple Raises iPhone Prices by £100 Due to AI Chip Shortage

Apple has added £100 to the price of its latest iPhones, a move that marks a significant break from decades of falling electronics costs. The company attributes the hike to a global shortage of memory chips, a component essential for modern smartphones but increasingly scarce due to massive demand from the artificial intelligence sector.

According to The Guardian, this price increase is not limited to new devices. Apple has also raised the cost of older iPhone models and its refurbished stock. The firm states that it has never experienced such a rapid and severe rise in component costs, forcing it to pass these expenses directly on to consumers.

AI data centers drive chip demand

The root of the problem lies in the AI gold rush. Vast data centers are consuming available memory chips at a rate that manufacturers cannot match. This has created a severe supply deficit, with some chip prices jumping five times their previous levels. Memory costs alone have risen by more than 300 percent year on year, according to research firm IDC.

Because newer and older iPhones use similar memory components, Apple is treating the entire range as current products. This means that even devices that are no longer the latest models see their prices adjusted upwards. The trade-off is clear: consumers pay more for the same hardware because the underlying materials have become significantly more expensive to source.

Wider impact on tech markets

The price pressure is not unique to Apple. Samsung and Google have also increased the prices of their flagship phones by up to £80. In the computer sector, Microsoft added up to £220 to certain Surface models, while Dell saw high-end laptop prices rise by 25 percent. Even gaming consoles are affected, with Microsoft raising the price of its Xbox Series X by over £200.

Some manufacturers are attempting to mitigate these costs by reducing specifications. Microsoft, for example, released versions of its computers with less memory to keep prices lower. This forces software developers, including Microsoft itself, to optimize operating systems to run on reduced hardware, a shift that has not been necessary in years.

Sales forecast shows market contraction

The rising costs are already impacting consumer behavior. IDC predicts that global smartphone sales will fall by nearly 17 percent this year, the steepest annual contraction on record. The report notes that people are buying fewer phones and paying considerably more for the ones they do purchase.

While the second-hand market has not yet seen widespread price hikes, experts warn that the shortage could persist. Key memory producers suggest that the scarcity may continue well into 2027, meaning that the current price increases could be only the beginning of a longer period of higher costs for electronic devices.