Soaring memory prices are set to kill the budget PC, and smartphones are next for the chop.
Beancounters at the analyst outfit Gartner have added up some numbers and divided by their collective shoe size and reckon global PC shipments will fall more than 10 per cent in 2026, while smartphones will drop about eight per cent.
The culprit is the AI-driven memory shortage, which has turned DRAM and NAND flash into a costly nightmare. Some memory types have doubled or quadrupled in price since last year.
Gartner thinks DRAM and NAND flash used in PCs and phones will rise by another 130 per cent by the end of 2026. That means the entry-level PC is heading for the skip because vendors cannot build them cheaply enough for tight-fisted buyers.
Gartner research director Ranjit Atwal said: “Because the price of memory is increasing so much, vendors lose the ability to provide entry-level PCs – those below about $500,”
PC makers could raise prices above that level, but price-sensitive buyers are unlikely to play along. AI PCs are making the mess worse. These machines use special hardware for AI tasks, usually a neural processing unit inside the CPU.
They were supposed to take the market by storm, but they need more memory, and vendors are slapping premium prices on them.
“Historically, downgrading specifications was the way to go when prices were being squeezed, but that’s difficult here,” Atwal said.
Microsoft requires at least 16GB for Copilot+ PCs, while Gartner recommends at least 32GB for new enterprise machines.
“The thinking was that the average price of AI PCs would fall this year, and lead to more adoption, but that’s not happening,” Atwal said.
The lack of killer apps is not helping. Buyers still care more about price, battery life and performance than whether a machine can do AI tricks.
HP said in its latest earnings that 35 per cent of the PCs it now sells are AI PCs. But those boxes were supposed to be dominating by now and nearly unavoidable next year. The memory squeeze has complicated that dream. HP said DRAM now makes up 35 per cent of PC build cost, up from between 15 and 18 per cent last quarter.
The company expects that share to rise through the rest of the calendar year. That means AI PCs are likely to stay in the premium bracket for longer.
Atwal predicts they will not make up more than 50 per cent of the market until 2028, which leaves non-NPU machines hanging around.
Gartner expects businesses and home users to sweat their old hardware for longer rather than refresh. System lifetimes are expected to rise by 15 per cent in businesses and 20 per cent for consumers.
Anyone thinking of buying a replacement machine may want to move before prices climb further and stay inflated into at least the end of 2027.
Smartphone makers have more margin to play with, so they can be a bit more flexible. The cheap end of the phone market is still likely to get thumped.
“The increase in memory prices means entry phones will become more expensive, but premium devices are likely to go up less,” Atwal said.
That will shrink the price gap between budget and premium phones. Some buyers will move upmarket, while others will keep their old handsets and pretend the cracked screen adds character.
“What we have here is a fairly unique situation. Usually when memory prices shoot up, it is because of production issues constraining supply. Here, it is demand-side pressure from hyperscalers pushing up memory costs for PCs and smartphones,” Atwal said.
The shortage could drag on until the end of 2027.
