Consumers paying $250 more for an Xbox and $300 extra for iPads as AI chip boom drives up costs

Consumers are paying $250 more for an Xbox and $300 extra for an iPad as the artificial intelligence-led boom in data centres drives up costs for manufacturers of laptops, computers and gaming consoles.

The rise of AI has caused a massive supply and demand imbalance for memory chips, with data centres competing with more traditional consumer tech manufacturers.

Analysts at Macquarie said consumer tech hardware prices have been in a period of “hyperinflation” over the past year as manufacturers seek to manage margins, with unprecedented price increases of up to 40 per cent on flagship items like mobile phones and laptops.

Electronics giant JB Hi-Fi recently noted the “sticker shock” from higher prices.

Macquarie said over the past few months, there had been a clear pass through of memory price inflation. Of note, Microsoft had implemented significant price rises across its Xbox and Surface ranges, up as much as 42 per cent.

Prices of Samsung tablets and phones only increased by a single-digit percentage in April.

“We have seen manufacturers increasing price on already-released SKUs (products) as these companies looked to manage rising memory prices as it flowed through the supply chain,” Macquarie said.

The analysts added this was unusual given manufacturers tend to try to hold prices ahead of the next generation of products.

The Xbox Series S 1TB jumped from $599 to $849 at the start of August, while the price of Microsoft’s Surface Pro 12-inch increased 32 per cent to $1620.

Meanwhile, the Nintendo Switch 2 is $70 more expensive.

Consumers will also have to fork out an extra $300 for an iPad Pro. It comes as Apple hikes prices across its iPhone line-up by $US100 ($140), even on older models.

Former Apple boss Tim Cook dropped hints about “unavoidable” price hikes in mid-June due to rising global memory and component costs.

Macquarie said stock availability remained patchy across electronic retailers.

“As cost inflation translates into price, it is also influencing the overall availability of stock, with it particularly being a topic of discussion alongside the JB Hi-Fi result,” it said.

In August, JB Hi-Fi boss Nick Wells warned suppliers continued to push prices higher and stock availability shortages in the technology categories remained a key issue.

He said categories like laptops and PCs have been significantly affected by component shortages, with some brands hiking prices by as much as 50 per cent.

Mr Wells has said JB Hi-Fi absorbed some of the higher supplier costs to entice shoppers to open their wallets, which has eroded the retailer’s profit margins.

Meanwhile, Harvey Norman suggested it had seen minimal impacts from stock shortages as the Australian franchised network tends to have a longer inventory turnover cycle.

Macquarie’s preferred stock is JB Hi-Fi “as it continues to execute around key product launches, subject to availability”.

Harvey Norman is its least preferred “as we expect furniture/homewares demand to remain challenged as housing churn and willingness to buy major household items remain soft”.