July 3, 2026

Electronics supply squeeze equals wallet squeezing

Consumer electronics are about to get much more costly. First, we have the conflict in Iran which is driving up prices as raw material costs increase. Second, the AI data centre boom is cannibalizing supply. While there is some minor relief in certain sectors where orders are softening, causing RAM kit prices to dip slightly, the broader outlook is grim. Delays and further hikes are likely, and as history shows, prices rarely drop as fast as they go up.

The supply squeeze

A lack of supply is driving up prices as companies pivot away from consumers to prioritize data centers. The current bottlenecks are with RAM and storage, fueled by an explosion in demand. The AI bandwagon is eating everything, including electricity. Signs suggest we could be nearing a peak, but the descent won’t be pretty.

Hardware makers are hesitant to invest in new capacity because it takes years to build. They worry that over investing today will crash their margins in the future. In a low margin business, they are playing it safe, but that safety comes at our expense.

Shovels in a gold rush

There is an old saying: “During a gold rush, it’s better to be selling shovels than mining for gold.” Right now, the companies selling those shovels are doing it like it’s going out of fashion. They are abandoning stable consumer markets because the margins in AI are astronomical.

The problem is the shelf life. High end GPUs have a utility window of maybe two or three years before they become effectively worthless for AI training. This is why Nvidia is being clever—rumours of their CPU launch suggest they are diversifying to avoid putting all their eggs in one basket. They want the quick profit now while investing in a future where they own the whole stack.

The coming glut?

The silver lining is that we might eventually see a massive glut. We saw it when crypto crashed and cheap GPUs flooded the market. If the AI bubble pops, storage prices will likely plummet. GPUs may take longer to drop, especially as “AI only” cards are produced that aren’t useful for gaming or local work.

Cloud computing prices could also fall off a cliff as companies scramble to utilize hardware or take a total loss. I suspect some companies actually want you to just rent a PC from the cloud anyway—applying the software subscription model to your private server space.

The new normal

Until then, get used to phones with less RAM and higher priced hardware across the board. We’ll likely see this impact the next round of consoles and everything else. By the time July rolls around and the major tech shows conclude, we’ll be left with flashy AI products and even flashier price tags.

This is a problem. AI capable devices need more RAM, not less. This forces companies to either get radically more efficient with software or just pass the bill to us. It’s been a god awful few years for PC enthusiasts:

First: Storage woes and COVID supply chain issues.
Second: The crypto mining price spike.
Now: The AI boom.

The “Go Big” vs. “Go Small” approach

The current market is being shaped by Large Language Models. There is a clear divide in strategy: big American companies are “going big” on massive models, while Chinese companies are “going small,” focusing on specialized, efficient use over grand dreams.

Based on what I’ve used so far, the “small” approach seems more sustainable. They are taking a long term view rather than being driven by the immediate payout. I’m still not sold on the “AI” hype, and I’m definitely not happy about the hardware tax it’s imposing.

If you need hardware, you’re better off buying now. The best time was a few months ago, but with DDR4 and DDR5 prices being what they are, waiting for a “return to normal” might take longer than your current build can last.