More Power Systems Price Hikes, This Time They Are "Direc...

June 22, 2026

As you well know by now, prices for CPUs, GPUs, main memory, and flash storage have gone completely bonkers thanks to the GenAI system buildout, with systems specially designated for AI workloads now comprising 70.2 percent of the $122.6 billion in system revenues during the first quarter. AI sales would be even larger, and so would sales of traditional systems, had it not been for component shortages that have been consequently driving prices higher. But if there was no shortages to begin with, maybe revenues would also not be so crazy, too, and shipments would be maybe 30 percent to 50 percent higher.

Let me give you a sense of just how much faster component prices have risen compared to what shipment increases might have looked like. Spot enterprise DRAM prices are up around 5X to 7X compared to this time last year – that is not a typo – and spot enterprise flash drive prices are up somewhere between 3X and 4X. There is no way for growth in shipments that might have happened at prevailing prices to cover that spread. Which means these DRAM and flash prices are largely opportunistic.

If you were running DRAM and flash foundries, you would do the same. A whole lot of people are getting rich on this, and server OEMs and ODMs have no choice but to pass these costs through to customers.

IBM is no exception, and as we have previously reported, Big Blue had big price hikes on DRAM, flash, CPU, and other Power Systems components as well as on auxiliary disk, flash, and tape array products used in these systems on April 1 and May 1. IBM warned customers back in March to expect monthly price increases throughout 2026, but as far as we know, there was not a price hike on June 1.

There is, however, one coming on July 1, an announcement for which has been sent to Power Systems master distributors as well as downstream to their reseller customers. As far as I know, there have been no announcements to actual Power Systems customers through the normal IBM announcement letter channel for any of these price changes. IBM is trying to control the message for what is turning out to be the largest spike in DRAM and flash prices in the history of the IT sector.

Micron Technology, Samsung, and SK Hynix are getting filthy stinking rich on this, and have very little incentive to boost capacity and have little ability to do so since building a new foundry takes four to five years. All they can do is ride the tsunami of money all the way to the bank, shrugging their shoulders to the world.

The new price hike was announced to distributors and other Power Systems partners on June 12 and take effect on July 1. These price changes are cumulative, and IBM is not including the actual prices in its announcements so you can see how sky high they are.

First, the announcement includes the usual foreign exchange adjustment to get the currencies outside of the U.S. back in phase with the U.S. dollar. So on top of the price changes for the U.S. market, the following countries have an additive price increase as follows:

Sri Lanka up 8.2 percent
Philippines up 6.6 percent
Indonesia up 5.8 percent
India Onshore up 4.9 percent
Sweden up 3.8 percent
South Korea up 3.2 percent
Switzerland up 2.8 percent
New Zealand up 2.8 percent
Morocco up 2.8 percent
Japan up 2.2 percent
United Kingdom up 1.5 percent
South Africa up 1.3 percent
Czech Republic up 1.0 percent
Malaysia up 0.5 percent
Denmark up 0.1 percent

Now, for the underlying changes to Power Systems and related products. The announcement letter, which appears to not have a letter number, says that these are “directional price changes effective Jul 1 (estimates; actual change may vary by configuration and timing),” which is an interesting bit of language. So, IBM can charge more or less than it says depending on “configuration and timing?” That doesn’t sound like a list price at all.

In a separate form letter that it looks like partners are supposed to use to notify their downstream Power Systems customers, the IBM letter says further that:

“Based on current industry forecasts, we expect component costs to continue to increase through 2026 and therefore going forward, price adjustments may be made monthly, on the first of each month, as required to reflect market conditions.”
“We will continue to honor prices once an order is placed; prices will not increase after order acceptance.”

Generally speaking, the IBM letter to partners characterizes the price changes as follows, by product category:

IBM FlashSystem up 40 percent
DS8000 up 35 percent
Virtual Tape System up 20 percent
Tape Drives up 40 percent
Tape Libraries up 15 percent
Ready Node up 20 percent
Power Servers up 17 percent

I have no idea where these numbers come from.

If you look at the accompanying spreadsheet IBM gave to distributors and partners, the price changes for the FlashSystem arrays were hiked by 15 percent and flash drive price increases ranged from a low of 36 percent to a high of 185 percent. If you average across the 53 features that had price increases, you get 70 percent.

Price increases for flash drives for the DS8000 arrays were generally 20 percent with some outliers being 52 percent. So, again, no idea where that 35 percent shown in the bulleted items comes from.

For tape drives, the price of the TS1160 and TD1170 tape drives was raised by 40 percent, and what this has to do with DRAM or flash memory, we are not sure. There are flash cache controller features for the TS7000, TS7770, and TS7780 drives, and these had a 15 percent hike on July 1. (Remember, IBM has jacked up prices already on April 1 and May 1.) Current LTO tape drives had a 40 percent hike, which is again inexplicable as did disk drive modules for them. Ceph and Scale arrays had price increases, but oddly enough Ready Nodes based on Dell PowerEdge servers got a price cut on their SAS hard disks. NVM-Express flash modules for the Dell iron saw price increases ranging from 18 percent to 37 percent.

On Power Systems servers, DRAM main memory modules for all Power10 machines were increased by 20 percent, from top to bottom. There does not appear to be such an increase for Power11 machines. So if you are buying a last-minute Power10 machine – Power10 iron is being removed from the IBM catalog on July 31, which we previously reported on here back in early February – you are helping to subsidize the lower price on memory that Power11 system buyers are getting.

On the Power Systems software front, the Red Hat AI Inference Server for manual development for Power had its subscription price increased by 56 percent, and Red Hat OpenShift AI for Power Premium, a Kubernetes container controller tailored for AI workloads, had its price doubled. Heaven only knows that this software costs.

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