Apple and Microsoft are each raising the prices of some of their core products, as global demand for memory and storage chips sharply increases component costs.
Apple said on Thursday that it will raise the prices of certain MacBooks and iPads by up to $300. Hours later, Microsoft announced it would increase the prices of its Xbox consoles starting August 1. Both companies cite the rising cost of semiconductors used for storage and memory in electronic devices, including computers and video game consoles.
The announcements come as the rapid expansion of AI data centers heightens demand for computing power, exacerbating a chip shortage.
“We have never seen a component price increase this much, this quickly,” Apple said in a statement shared with CBS News. “We have shielded our customers from these increases so far, but we have now reached a point where we need to begin raising prices on several products, including today’s increases for iPad and Mac.”
In its statement, Microsoft said console storage and memory prices have more than doubled and that it expects prices to double again by fall 2027.
“The entire consumer electronics industry is struggling with the current components crisis, but the effects are particularly hard on consoles,” the company said.
What Apple products are affected?
The price hikes are impacting multiple Apple products, according to The Verge. The MacBook Neo, which Apple introduced earlier this year to appeal to budget-conscious customers at a starting price of $599, has increased to $699.
Other changes include:
- MacBook Air 512GB: Now $1,299, up from $1,099
- MacBook Pro 1T: Now $1,999, up from $1699
- iPad Air 128GB: Now $749, up from $599
The price hikes exclude the iPhone, according to Reuters.
“Apple hasn’t announced what the iPhone price increases will be, but they are surely coming,” Nabila Popal, senior director of data and analytics at International Data Corporation, a market intelligence and advisory firm, said in an email. “The storm isn’t over yet; this is just the beginning. iPhones are the biggest revenue driver for Apple, so they are saving that announcement for later.”
Apple shares tumbled after the company’s announcement, falling $16.49, or 5.6%, to $276.68, in midafternoon trading.
Which Microsoft products are affected?
Microsoft is raising the price of Xbox gaming consoles with 512 GB of storage by $100 to nearly $500. Consoles with 1 TB of storage will increase by $150. Both hikes take effect August 1.
The price hike comes after Microsoft increased Xbox prices by $20 to $70 last year.
AI boom drives up chip costs
Chip shortages arose during the pandemic, when factory closures led to supply chain snags. Now, the race to build data centers required to power AI services is putting more pressure on the semiconductor industry.
In December, research firm International Data Corporation said the memory market is at an “unprecedented inflection point” and predicted the chip shortage could last “well into 2027.”
The shortage has had a knock-on effect on everyday tech, including personal computers, which are seeing higher prices for the first time in decades.
In an exclusive interview with the Wall Street Journal on June 17, Apple CEO Tim Cook said the company is doing its best to shield customers from price hikes but said, “the situation has become unsustainable.”
“I’ve never seen anything like it in any area in over 40 years,” he told the Journal.
