Apple and Microsoft raise device prices as AI-driven chip costs surge

Apple and Microsoft have announced significant price increases across several of their flagship consumer products, citing soaring memory and storage chip costs driven by the rapid expansion of artificial intelligence infrastructure.

Apple on Thursday raised prices for a range of Macs and iPads, with several popular models seeing increases of more than 20 per cent. The base MacBook Air now costs $1,299 in the US, up from $1,099, while the entry-level MacBook Pro has risen to $1,999 from $1,699.

The company also increased the starting price of the iPad Air from $599 to $749 and the iPad Pro from $999 to $1,199. Its entry-level MacBook Neo now starts at $699, compared with $599 previously, while the Mac Studio M3 Ultra recorded the sharpest increase, climbing from $3,999 to $5,299.

Apple said it had absorbed higher component costs for as long as possible but could no longer avoid passing some of the increase on to consumers.

According to a report by Al Jazeera, unprecedented demand for memory and storage chips from AI data centres has pushed component prices sharply higher, creating cost pressures across its product portfolio.

The announcement unsettled investors, with Apple shares falling more than 6 per cent, marking the company's steepest single-day decline since the market reacted to US President Donald Trump's "Liberation Day" tariff announcement last year.

Consumer technology analyst Trevor Long said the higher prices could weaken demand, particularly for products that had previously stood out because of their affordability.

He noted that the MacBook Neo's competitive pricing had been one of its biggest selling points and warned that the increase narrows the gap between Apple and rival manufacturers. Long also predicted that future iPhone models could see price rises of between $50 and $150, depending on the variant.

Microsoft has also blamed rising chip costs for increasing the prices of its Xbox consoles. The company said the 512 GB and 1 TB versions would become $100 and $150 more expensive, respectively.

The software giant said it had explored alternatives with suppliers in recent months but concluded that higher prices were unavoidable. It added that storage and memory chip costs had already risen more than two-and-a-half times and could double again by late 2027.

Microsoft said the broader consumer electronics industry was grappling with the same supply pressures, although gaming consoles had been particularly affected because of their heavy dependence on memory and storage components.