economy
Why "chipflation" is here to stay
The cost of computer memory used to get cheaper over time. No longer.
TL;DR
- Memory chip prices are skyrocketing due to AI demand, leading to higher costs for electronic goods and cloud services.
- The Producer Price Index for electronic components saw a 27.6% increase in June year-over-year, the largest on record.
- AI hyperscalers are securing memory supply years in advance, leaving traditional PC and phone makers with limited options.
- Apple is reportedly testing memory chips from Chinese manufacturer CXMT, which would require White House approval.
- This 'chipflation' reverses a decades-long trend of decreasing memory costs.
- Companies are experiencing 'Fear of Missing Procurement' (FOMP) and are maintaining tech spending despite rising costs.
- The July CPI report is expected to show some increase in electronics prices, with a potential 10% year-over-year increase for computers.