Apple, Microsoft hike prices over surging chip costs

Apple and Microsoft have rolled out steep price hikes for some of their best-selling products, blaming soaring memory chip costs amid the boom in AI.

Apple on Thursday increased prices across its range of Macs and iPads, with many of its most popular models seeing hikes of 20 percent or more.

The base model MacBook Air now retails in the United States for $1,299, up from $1,099, while the lowest-spec MacBook Pro rose from $1,699 to $1,999.

The base price of the iPad Air increased from $599 to $749, while the iPad Pro jumped from $999 to $1,199.

Apple’s entry-level MacBook Neo is now priced at $699, up from $599.

The Mac Studio M3 Ultra desktop computer saw the steepest price rise of any product, jumping from $3,999 to $5,299.

Apple said that while it had shielded consumers from rising chip costs until now, it had “reached a point where we need to begin raising prices”.

“The rapid expansion of AI data centres has created an extraordinary surge in demand for memory and storage,” an Apple spokesperson said in a statement.

“We have never seen a component price increase this much, this quickly.”

Apple’s stock price fell more than 6 percent following the price hikes, its steepest fall since US President Donald Trump’s announcement of his “liberation day” tariffs in April last year.

Trevor Long, a consumer tech analyst and commentator based in Australia, said he expects the price increases to affect Apple’s sales.

“Some products, like their newest product, the MacBook Neo, while excellent as products, were also outstanding because of price,” Long told Al Jazeera.

“This hits that hard. They are still a decent deal but push closer to other competitive product prices as well.”

Long said he expects the coming year to be challenging for leading tech players such as Apple.

“The key thing will be the next iPhone and how close they can price it to the last one,” Long said.

“I’d expect a $50-150 price rise across the range, depending on models.”

Microsoft also cited rising chip prices in an announcement confirming that it would raise the price of the 512 GB and 1 TB models of its Xbox gaming console by $100 and $150, respectively.

“We hoped another price increase would not be necessary, and we have spent the last several months working with suppliers on options,” Microsoft said in a statement.

“Unfortunately, console storage and memory prices have increased by more than 2.5x and we expect another doubling by the fall of 2027,” the Redmond, Washington-based tech giant said.

“The entire consumer electronics industry is struggling with the current components crisis, but the effects are particularly hard on consoles.”