Your next iPhone will likely cost more than the last iPhone you purchased.
The same goes for the next Xbox.
And that could be your next PC, TV, or anything else that has electronics inside.
Blame the AI.
That’s the message we’re getting from executives across the country. The steady drumbeat of business leaders says the AI boom means that the chips and other components needed for their products will be sourced by AI companies. That means rising costs and passing those increased costs on to consumers.
Apple CEO Tim Cook made headlines this week when he predicted future iPhone price increases in the Wall Street Journal. He said higher prices are “inevitable” because the chips Apple needs for memory and storage are sourced by big tech companies that spend billions of dollars building AI.
Cook is the most high-profile CEO to sound the alarm about AI’s soaring prices, but he’s not the only one.
A few weeks ago, Asha Sharma, head of Microsoft’s Xbox division, said her company’s business was in a “hardware component crisis” due to rising storage costs.
In February of this year, “the price we paid for console storage components was more than double the price we paid last fall,” she explained in an open letter. “These costs have since doubled again. And as we plan for the 2027 holiday season, we expect an even bigger increase, making them more than five times the price we paid just two years ago.”
Sharma says her business sees the same pattern when it comes to memory costs.
These warnings have been out for some time. Last December, Dell announced that it would raise prices due to rising AI-related prices. Ford said yes, your car is now a computer on wheels — and it had the same concerns in February.
And they come from different parts of the economy. In early June, a coalition of industry groups including retailers, media companies, and the medical supplies industry told White House officials that “an urgent imbalance in the memory chip market…could lead to significant and sustained short-term price increases for American households.”
What does all this mean for you as a buyer? We’re not entirely sure yet.
For example, Apple doesn’t release new iPhones until the fall, so you can’t really compare them until then. And even if we did, we wouldn’t be comparing apples-to-apples, as newer iPhones have features that older models don’t have (please bear with us).
It will also be difficult to assess the impact of AI on big-ticket items. The price of your next car will most likely have more to do with Donald Trump’s tariff policies than the price of DRAM chips.
And it’s understandable that you’re a skeptic who wonders if CEOs who blame rising chip prices have motives other than telling the truth. Just as some people believe that AI-related layoffs actually have nothing to do with AI at all.
But there teeth There is a lot of evidence that the cost of AI-related chips is indeed rising, all driven by the boom in AI data centers. Things to think about the next time you ask a chatbot for help.