Apple’s recent product launch caused headlines around the world as it unveiled its first folding phone. But hidden in the slick technology showcase was a nasty surprise: a £100 increase in the price of all iPhones, including older models. It is blamed on “RAMageddon”, which has reversed a decades-long trend of electronics becoming cheaper.
It is the fallout from the AI gold rush hoovering up every memory chip available for vast datacentres. This has led to a severe shortage of the chips, and other critical components, for electronics, including phones. The situation has dramatically driven up costs, with some chips five times dearer than previously listed.
Therefore the everyday electronics products people rely on are suddenly significantly more expensive to make, and that is being passed on to consumers. The iPhone is not the first product to have a “RAMageddon” price increase, but it is the single biggest-selling electrical product in the world. For many, this means the real cost of the AI splurge will be £100 without getting anything more for your money.
Other manufacturers of smartphones have also increased the price of new models, with Samsung and Google adding up to £80 to their flagship phones. Apple has also increased the price of its refurbished stock by £60 to £70, including the older iPhone 15 that is no longer sold new in the shops. However, according to data from Uswitch, the increase in cost has yet to reach the third-party refurbished iPhone market.
The impact has been particularly acute at the lower end of the market. In its latest forecast, IDC predicts there will be the steepest annual contraction in worldwide smartphone sales on record this year, falling almost 17% to just over 1bn handsets. There have been bigger price rises for other electronics.
Computer makers, which are much more exposed to rapidly jumping memory and chip costs, have had to raise prices several times over the past 18 months. Microsoft added up to £220 to some of its Surface computers but also released versions with half as much memory as a way to attempt to keep prices down. The move has forced the company to try to redesign Windows to run more comfortably with only 8GB of RAM, which it hasn’t for several years.
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