In a gold rush, there are often more losers than winners. The same applies to the rise of AI, where consumers, whether or not they’re fans or users of the technology, have to dig deep into their pockets for products that were still affordable just a year ago. Among manufacturers, too, there are success stories and declining sales figures. Who’s winning and who’s losing? And what are the long-term consequences?
Omdia revealed last week that global PC shipments plummeted by 21 percent. So-called “pull-forward” demand led to faster-than-usual upgrade cycles; organizations may have anticipated further price increases and acted sooner. Manufacturers are no longer benefiting from that windfall. Although memory and storage are causing the biggest price hikes and shortages, Omdia notes that the supply of CPUs, GPUs, and IC components is also under pressure.
HP and Dell illustrate how demand for computing power has shifted. Although the former saw 18 percent revenue growth for Personal Systems in the May–July quarter, its margin fell from 5.4 percent to 4.6 percent. Sales of PCs for consumers and commercial customers dropped by 16 percent. The price of memory as a percentage of total manufacturing costs has likely risen even more than the 35 percent cited by interim CEO Bruce Broussard, though it has roughly doubled compared to 2025. Counterpoint describes HP’s product portfolio as “highly exposed” [to the consumer market and the mid-range business market]. Dell, on the other hand, reported revenue growth of 58 percent, but that was mainly due to strong demand for AI servers.
HBM is crowding out DRAM
HBM, the memory used for AI chips, is made from DRAM wafers. Each HBM bit takes up about three times as much space on a wafer as a DRAM bit. See here how capacity is rapidly collapsing. There are only three major memory manufacturers: Micron, Samsung, and SK Hynix. Although they are always subject to significant cyclical fluctuations in demand over the long term, and thus can never perfectly align their supply with it, they have a shared interest in restricting supply, at least for the next few years. The margins for HBM are simply enormous. The Chinese company CXMT could provide additional supply but is not competitive in the HBM sector; for DRAM, however, it could eventually serve as a supplier for companies such as HP, Dell, ASUS, and Acer.
Acer, in particular, is counting on this. Chairman Jason Chen expects PC prices to rise by 5 to 20 percent until there is some breathing room again in mid-2027 thanks to CXMT shipments. For smaller players such as MSI, Valve, and Raspberry Pi, the increased costs are effectively unsustainable in the long term. PC giant Lenovo, however, has enough DRAM to last through all of 2026, a stark contrast.
Other risks
HP and Lenovo demonstrate that a manufacturer’s size isn’t the be-all and end-all. Nor are all small players going under, especially since hardware sales are by no means always the sole source of revenue. Revenue from PC divisions also continues to grow “as usual, ” albeit with disappointing figures.
The real danger is yet to come, namely, when the cycle reverses again. Where will it lead? Prices were extremely favorable for DDR5 in 2024–2025, but the opposite was true for DDR4, as its production declined and will eventually cease. The current shortages and surge in demand are pushing that production halt further into the future, but an end is still in sight. Furthermore, by the end of this price surge, DDR5 may no longer seem nearly as new. DDR6 is already expected in a few years. Here, too, the same well-known cycle applies: the old generation is phased out and rises in price, while the new offerings dominate the mainstream market.
This leads us to believe that DDR5 may never again be as cheap as it was last year. Furthermore, DDR6 will offer its manufacturers the opportunity to roll it out very gradually and with a focus on risk management. It’s possible that demand for memory in general will still be relevant by then, especially since HBM cannot be repurposed for consumer chips. The price drop, if it comes at all, will first occur among HBM buyers once HBM production becomes dominant. If no manufacturers run into trouble with the new margins for DDR6 and a lack of discounts on DDR5, that will be a major surprise.
Read also: OVHcloud warns: price increase of up to 87% due to memory shortage