PC component costs are skyrocketing due to surging demand for AI infrastructure, with RAM prices experiencing a significant spike. HP revealed that memory now makes up 35% of a PC’s overall bill of materials.
During HP’s latest earnings call, CFO Karen Parkhill disclosed that memory and storage costs have jumped to 35% of the PC bill of materials, up from 15% to 18% in the previous quarter. “We did share last quarter that memory and storage costs made up roughly 15 percent to 18 percent of our PC bill of materials, and we now currently estimate this to be roughly 35 percent for the year,” Parkhill said, indicating the company’s plan to offset these rising costs with price increases. Samsung has also warned of potential price hikes due to AI-induced memory shortages.
To mitigate supply constraints, HP is diversifying its supply chain. Interim CEO Bruce Broussard stated that while he believes the “market will rationalize over time,” the company is actively adding new suppliers and expanding its sourcing of lower-cost memory options. “We believe the market will rationalize over time,” Broussard said.
Despite rising costs, HP is seeing strong demand for AI-enabled computers, with 35% of its PC sales now coming from AI PCs. This trend contrasts with Dell’s recent statement that consumers are largely indifferent to AI PCs, highlighting mixed signals in the industry regarding consumer appetite for these devices.
The broader semiconductor market is facing similar pressures, with memory manufacturer Micron discontinuing its consumer brands to focus on B2B memory supply. Other critical components, including GPUs, are also experiencing supply shortages driven by the booming AI sector.
