Microsoft and Apple are raising prices on major consumer electronics due to skyrocketing memory and storage chip costs driven by AI data-center expansion. The cost of these components has more than doubled and is expected to double again by late 2027, forcing manufacturers to pass costs to consumers. This is the third price increase for Xbox in 2025, and analysts predict even steeper iPhone price hikes may follow later this year.
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Microsoft will raise Xbox prices by $100–$150 starting August 1, with the Series S moving to $500 and the Series X to $800 in the US. Apple simultaneously announced price increases for Macs (up to $300 more) and iPads (up to $200 more), citing an 'unprecedented challenge' from AI data-center demand for memory and storage chips. This is Microsoft's third price increase for Xbox in 2025, following hikes in May and October.
Why it matters
The accelerated construction of AI data centers has created severe supply shortages in memory and storage chips, driving costs more than double and expected to double again by late 2027. Gaming consoles, unlike phones, are typically sold at a loss, making these component cost increases particularly painful for manufacturers. Analysts expect iPhone prices may rise by as much as $200 for Pro models later this year, signaling that price pressure will extend across consumer electronics.
What to watch
Apple's stock fell 4.5% on the announcement. IDC analyst Nabila Popal noted that the latest increases are larger than expected, suggesting the era of $50 price bumps may be ending. The 2TB Xbox model will be discontinued, and consumers should expect further price rises for iPhones as component costs continue to climb through 2027.
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