JB Hi-Fi warns of price hikes ahead for electronics as data centre surge squeezes computer memory supply

Consumers can expect to pay more for smartphones and laptops, JB Hi-Fi boss Nick Wells warns, as the artificial intelligence-led boom in data centres squeezes technology supply chains.

The rush has triggered stock shortages of computer memory and pushed prices up, Mr Wells said on Wednesday.

“We’re all trying to hold the price, as we know customers are very focused on value,” he told investors at a conference in Sydney.

“At the same time, what we do have, which is unique to our industry, is we’re seeing really significant price increases to component-related costs in improving anything that’s got memory.

“This massive demand for memory, historical CPUs (central processing units), but which is really being driven by AI data centre set-up, has created a lot of capacity constraints for memory for consumer devices. And that is a . . . very specific issue, nothing really to do with the Middle East.”

Sales at the flagship JB Hi-Fi Australia stores rose 4 per cent in the third quarter, or by 2.6 per cent on a comparable basis. Sales at its white goods chain, The Good Guys, rose 2.5 per cent, while home appliance and bathroom retailer e&s slumped 1.4 per cent.

JB Hi-Fi New Zealand recorded a 23.2 per cent surge.

Analysts at RBC Capital Markets said the comparable sales result across Australia’s JB Hi-Fi stores looked “a little soft” against its consensus of 3.2 per cent, but noted it was also a seasonally quieter period.

They said comparable sales would need to accelerate about one per cent in the current quarter to hit consensus forecasts of 3.2 per cent for the second half and 4.1 per cent for the full year.

“Management have called out potential headwinds to achieving this, including supplier price increases, competition and availability, though JBH’s outlook commentary is typically cautious in nature,” they noted.

Mr Wells, who last October replaced long-serving boss Terry Smart, said new categories like wearable technology and beauty were proving to be a big opportunity in attracting shoppers.

He said the electronics retailer was allocating more floor space to wearable tech, including rings — like the Oura ring — Meta AI glasses and monitoring devices.

“There’s a potential view that AI may change the role of the mobile phone or the role of the PC, and that a wearable device becomes more and more important. So we’re definitely allocated more space into that category,” Mr Wells said.

He added that the retailer should benefit from consumers wanting to replace technology purchased during the COVID-19 pandemic, ranging from coffee machines to portable appliances and gaming devices.