Fast Company
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AI is making your gadgets more expensive and less powerful
The tech industry is facing a significant shift where consumer hardware quality is declining due to escalating component costs, despite the release of new products like Apple's M6-powered Macs and upcoming iPhones. Nvidia's Vera CPU, for instance, is seeing memory reductions, described as "content optimization" rather than decreased need, to cope with supply constraints. This isn't a halt in innovation or the end of Moore's Law, but rather a consequence of soaring expenses. High demand from hyperscalers for AI infrastructure is driving up memory prices, with major memory players prioritizing higher-end products. Expanding manufacturing capacity for these advanced components is slow, taking years to build new plants that often focus on high-return GPUs. Memory components now cost four to five times more than a year ago, sometimes comprising over half the bill of materials for cheaper devices. Manufacturers are responding by cutting back on components, resorting to 4G phones, reduced storage, inferior cameras, or older processors. While high-end products may retain quality, the lower end of the market will see less powerful devices. This situation is squeezing the middle market, pushing consumers towards more expensive new devices or refurbished options. The trend is expected to persist for several years, with meaningful price declines unlikely within 18 months and the squeeze potentially lasting until mid-2028.