Apple’s Macs and iPads and Microsoft’s Xbox consoles are getting more expensive, and AI is to blame

The surging cost of memory chips has translated into a bonanza for companies like Micron Technologies Inc., but for almost everyone else there’s going to be a steep price to pay, with both Apple Inc. and Microsoft Corp. raising the price of some of their most popular products today.

First came Apple, which announced this morning that it’s increasing the prices of its Mac computers and iPad tablet devices, just a week after outgoing Chief Executive Tim Cook said soaring component costs would leave it with no alternative. It was followed hours later by Microsoft, which revealed a significant price hike for the Xbox video game console.

The iPhone maker briefly took the Apple Online Store offline in the morning, in a move that normally signifies the launch of a new product. But the only new thing that appeared when it returned was significantly higher prices on some existing devices, with iPad models now costing between 15% and 25% more, and Mac prices rising by between 15% and 20%.

Apple said the MacBook Air laptop will now cost $1,299 after receiving a $200 price hike, while its most affordable model, the entry-level MacBook Neo, now costs $699, up $100. The price of the flagship MacBook Pro meanwhile has increased $300 to $1,999. As for the iPads, the heavy-duty iPad Pro model now comes with a $1,199 price tag, up $200, while the iPad Air has a new price of $749, up by $150.

For now, Apple has put off increasing prices for its iPhone handsets, though it hinted that it’s considering doing so in the not too distant future. “We have reached a point where we need to begin raising prices,” a spokesperson for the company said. “We have never seen a component price increase this much, this quickly”

Apple’s hand was forced by the soaring cost of dynamic random-access memory chips and NAND storage chips, which have become essential components for artificial intelligence servers. The cost of those components has more than quadrupled over the last year, according to data from the research firm TechInsights, and most experts project prices to continue increasing in 2027. Both memory and storage are essential components in everything from smartphones to personal computers, games consoles to cars – basically any “intelligent” device.

Cook had warned of an imminent price hike last week when he told the Wall Street Journal in an interview that the higher costs of those products had made such a move “unavoidable.”

In the wake of Apple’s move, Microsoft dropped a bombshell on the video gaming world when it said that its Xbox consoles are getting more expensive. It will also be discontinuing the sale of its 2 terabyte model. Gamers have at least been given an early heads up. Starting August 1, the 512 gigabyte Xbox will cost $100 more, while the 1TB models will see prices rise by $150. In a blog post, Microsoft also blamed the price increases on rising memory and storage costs, saying that these components now cost 2.5-times more than they did at the beginning of the year. The company warned that component costs could double again over the next 12 months.

The announcements highlight the growing impact of the AI boom on the lives of everyday consumers, who can now expect to pay significantly more money for almost any electronic device. Microsoft has at least tried to soften the blow somewhat, highlighting various financing options for anyone wanting to buy an Xbox, including its Buy Now, Pay Later options through the Microsoft Store. It also said it’s working on creating new programs for anyone that wants to buy “previously played consoles at lower prices.”

“Players who are ready to upgrade or no longer use their console will be able to trade it in with participating retail partners for cash or store credit,” the company said. “Those consoles will then be made available at lower prices for players.”

Apple’s and Microsoft’s announcements came less than a day after Micron, America’s biggest manufacturer of memory and storage chips, delivered record-breaking revenue and profit in its latest quarterly financial report. The company’s stock gained more than 16% after revealing a gross profit margin of more than 86% on its memory chip products, and helped trigger a broader rally among semiconductor stocks today.
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In yesterday’s earnings call, Micron CEO Sanjay Mehrotra said that tight supply conditions are set to persist into 2028, having previously only forecast the situation to last into 2027.

Image: Apple