AI demand is contributing to a memory chip shortage — and as a result, the prices of some consumer electronics are beginning to rise.
The acceleration of the global artificial intelligence race has seen memory chips become more expensive within the past year.
Memory storage, known as RAM, was crucial for all computing devices, including phones tablets and laptops.
Ben Maxwell, founder of Tauranga electronics store Compulsion Tech, said the cost increase had been dramatic.
"A memory kit in July last year would've been about $150. That same kit now is about $850," he told 1News.
The surge had been driven by demand from technology companies building AI data centres, which required large amounts of memory components.
Data centres supported internet services such as cloud storage, online banking networks and artificial intelligence tools.
Technology Users Association chief executive Craig Young said the chip shortage was affecting household electronics such as smartphones and laptops.
“We’re seeing phones at the high level going up anywhere up to 30%. Entry level laptops are going anywhere up between 10 and 20%,” he said.
"We’re going to live with this problem for the next two years, I think."
Young said the increases came at a time when devices were no longer optional purchases for many Kiwi households.
"We all need them for our lives, for our work, and for our schools and for our kids. So that's going to increase the cost of being able to participate in life, but also in education."
Kiwis repairing, upgrading tech instead of replacing
With the cost of new electronics rising, Maxwell said many Kiwis were instead opting to upgrade components of devices they already owned.
"A customer might have built a computer for $2000 a few years ago and the RAM might have only cost them $200 at the time," he explained.
"To replace that computer with new memory it might be $800 in RAM for the same amount. They're asking, 'Why would I replace the whole computer when I can just replace a few parts?'"
Director of Auckland electronics workshop Good Tech Fraser Webb said more people were now choosing to repair their devices, adding that repairs were often simpler than people realised.
"Some people just don't realise that there's lint in the port or that the battery is dying, and these things are being replaced really easily,” he said.
"People are having to make some choices and it's a tough economy,"
The trend was also creating challenges for organisations which refurbished donated devices for families in need.
"We're getting warnings from our suppliers and manufacturers that there will be a price increase this year,” Digital Future Aotearoa chief executive Kris Dempster-Rivett said.
At the same time, he said people were also holding onto their electronics for longer, reducing the number of donated devices available.
"We have a waiting list of whānau and community groups that have requested devices. We can't service that need at the moment.”
With demand for AI infrastructure expected to continue growing worldwide, experts warned consumers were unlikely to see prices ease anytime soon.
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