What just happened? Microsoft's laptops are the latest victims of the ongoing AI boom and other supply chain shocks. All of the company's currently available models now cost hundreds of dollars more than last year, significantly worsening their value proposition compared to the MacBook Air, not to mention the recently released $600 MacBook Neo.

Microsoft has updated the prices for the Surface Pro and Surface Laptop models on its website in response to rising component costs. Each of the 13-inch models has received a $300 hike.

In a statement sent to Windows Central, which first reported the news, Microsoft confirmed that memory shortages are a primary factor behind the decision. Other manufacturers have also increased their prices, as RAM, CPUs, and, in some cases, even circuit boards become more expensive.

Following the hikes, Microsoft no longer offers a Surface device for under $1,000. The company's entry-level 12-inch Surface Pro, which launched last year for $799, now costs $1,049. Meanwhile, the 13-inch standard Surface Laptop has shifted from $899 to $1,199, and the 15-inch variant has jumped from $1,499 to $1,599 – $300 more than its original 2024 launch price of $1,299.

The 13-inch Surface Pro and 13.8-inch Laptop received the biggest hikes – from $1,199 to $1,499. Both models now cost $500 more than when they debuted in 2024 and several hundred dollars more than a 13-inch M5 MacBook Air with similar specs.

Numerous factors have contributed to rising component costs. The diversion of production capacity to AI data centers is the chief cause, particularly for memory, but international tariffs and the Iran war have not helped the situation.

In response, MSI recently announced price hikes of up to 30%, while analysts predict that laptop prices could rise by 40%, potentially driving the sub-$500 entry-level Windows laptop into extinction. Other products, such as graphics cards, Raspberry Pis, and the PlayStation 5, have also received price hikes.

These conditions gave Apple the perfect opportunity to leverage its unique degree of vertical integration to launch the MacBook Neo, the company's first sub-$600 laptop. The co-CEO of Asus called the product a "shock" to the Windows PC market, and Apple is already facing supply challenges due to unexpectedly high demand. Other manufacturers, such as MSI, are trying to respond, but supply chain problems will likely limit their options.