- 1 week ago
The rise of AI data centers is driving up the price of everyday electronics.
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00:00In 2025, this MacBook Pro cost $1,600.
00:04Less than a year later, the same laptop cost $400 more.
00:09Apple says it's because of demand for memory and storage
00:13fueled by the rapid expansion of AI data centers.
00:16That's the exact same reason Xbox gave for a $150 price hike
00:21on its nearly six-year-old console.
00:24Lenovo, Dell, and HP have all raised prices too,
00:29citing the same culprit.
00:31Just these seven drives alone is over $6,000 or $7,000.
00:34When I bought them, they were probably about $1,500 all in.
00:38These prices aren't tethered to new technology.
00:41They've just gone up because some center in some place
00:43needs them more than I do.
00:45The narrative is that AI data centers are buying up
00:48huge amounts of memory and chips,
00:50causing shortages and skyrocketing prices
00:52for everyday electronics.
00:54There's just one issue.
00:56Data centers don't use the same type of microchips
00:59as your phone or laptop.
01:00And now, the world's biggest memory chip makers
01:03are being sued for allegedly colluding to inflate prices.
01:07So who or what is actually to blame?
01:10AI data centers or the companies making the chips?
01:14And could a moratorium on data centers
01:17actually force prices down?
01:21To know what's really going on with these tech prices,
01:24we first need to understand three types of microchips.
01:28NAND, DRAM, and HBM.
01:31In terms of memory, they work a bit like the human brain.
01:35NAND is like your long-term memory.
01:37It holds onto information even after a device is powered off.
01:41Think of an iPhone as the best example.
01:44If you take a lot of photos, a thousand photos in a month
01:47or something like that, and they're on your phone,
01:48that's usually stored in NAND storage.
01:52DRAM, or Dynamic Random Access Memory,
01:55is your short-term memory, fast but temporary,
01:58and it clears the moment you switch the power off.
02:01HBM, or High Bandwidth Memory,
02:03is essentially DRAM on steroids.
02:06It's the same kind of short-term memory,
02:08but it's designed to process much more data at once
02:12more than any human brain could.
02:14While NAND and DRAM chips are used to power devices
02:18like smartphones, tablets, computers, and smart TVs,
02:22HBM chips are used to power AI systems.
02:25All DRAM, NAND, and HBM microchips
02:28start out as thin silicon wafers.
02:31The key point is that the more of these tiny, tiny cells
02:35and connections you can cram onto a wafer,
02:38the more data you can store onto that.
02:40HBM is a whole other level of storage capacity.
02:44HBM takes one of those chips
02:47and they stack them vertically next to another one,
02:50and then another one, and then another one,
02:52and they're kind of packaged together in a kind of 3D shape.
02:55When you mash all those chips together,
02:58you get a lot more memory.
03:01HBM can move data five to ten times faster
03:04than a standard DRAM chip.
03:06Its stack design also makes manufacturing HBM chips
03:09significantly more complex.
03:11All that complexity just basically means
03:14that they're much more expensive to manufacture,
03:18and actually they take a lot more
03:19kind of manufacturing capacity.
03:21These HBM chips are the backbone of AI data centers,
03:25and demand for them is through the roof.
03:28So if HBM is what powers AI,
03:31why is there a shortage of the other two types?
03:33It all comes down to just three companies,
03:37Micron, Samsung, and SK Hynix.
03:40Together, they produce more than 60% of the world's NAND
03:44and nearly 90% of its DRAM.
03:47All three companies have shifted
03:49at least some of their production capacity
03:51to building HBM microchips.
03:53And the stock prices for all three companies
03:55jumped massively between June 2025 and June 2026.
03:59If you're a memory chip company,
04:02obviously you're going to go to the best customers,
04:04and right now those are the AI companies.
04:06That means less capacity to produce
04:09the other kinds of chips.
04:10This shift is no surprise
04:12when you realize how central AI has become
04:14to the U.S. economy.
04:16Largest capital spending booms we've ever seen.
04:19Artificial intelligence is transforming the economy
04:21right before our eyes.
04:2280% of stock gains this year
04:25came from AI companies.
04:30Altogether, tech giants Google,
04:32Microsoft, Meta, and Amazon
04:33have spent more than $1 trillion
04:35on expanding AI since 2023.
04:39As of August 2026,
04:41there are 2,228 new data centers
04:44in planning or construction stages
04:46across the U.S.
04:48With less DRAM and NAND available,
04:50prices are soaring.
04:54Those higher component costs
04:56land on electronics companies,
04:58but instead of completely absorbing
05:00the extra expense,
05:01they're passing the bill on to customers.
05:03For instance,
05:05in June,
05:05Xbox announced it would raise the price
05:07of its 512 gigabyte Series S gaming console
05:11from $400 to $500,
05:13and the 1 terabyte version
05:15from $450 to $600.
05:18It also announced
05:19it would be discontinuing
05:20its 2 terabyte console.
05:22We went to a gaming tournament
05:23at OSNYC
05:25to see how gamers are taking the news.
05:27This, that, we are all!
05:32All right, all right.
05:33You know, I was thinking about buying
05:34a Xbox Series S,
05:36and back then,
05:37it was nice and affordable.
05:39It was around like $300.
05:40Because of what's going on,
05:41it's up to $600.
05:43It's just out of my budget.
05:46The vast history of gaming
05:47is a great story.
05:49I just hope that that story
05:51doesn't have a bad ending
05:52coming soon with
05:53the Foddy AI,
05:55luck and pengza.
05:56And it's not just Xbox.
05:57PC gaming gear
05:58is getting hit, too.
05:59I was expecting to go buy
06:01a Steam Deck,
06:03but because of the AI bubble
06:05and what the score is,
06:06it's completely sold out.
06:07Today's the Foddy stock,
06:08but they increased the prices
06:10just to match the current market.
06:12Xbox CEO Asha Sharma
06:14has already said
06:16that the gaming industry
06:17is pricing out some consumers.
06:19Price hikes like this
06:20are exacerbating it.
06:22I may have to play gaming
06:23and start foschy sports.
06:25Frustration over Xbox's plans
06:27to continue raising prices
06:28into 2027
06:29is something gaming YouTuber
06:31Luke Stevens
06:32has seen firsthand.
06:34Who among you
06:35is buying that
06:37for, let's say, $9.99?
06:40We're going to let this scroll
06:41and see where you're at.
06:42Jesus.
06:43I see a good number of notes.
06:47While Xbox has not announced
06:49the price of its
06:49next-generation console,
06:51the company warned
06:52that console memory
06:53and storage costs
06:54are expected to double again
06:56by the fall of 2027.
06:58The announcement isn't surprising,
07:00but it sure is disappointing.
07:03You know?
07:03We have a six-year-old console
07:05that is,
07:06for the top-tier variant,
07:07you know,
07:07approaching $1,000.
07:09So can you only imagine
07:11what the new one
07:12is going to cost?
07:13Like, that's...
07:14It's created a feeling of dread
07:16among a lot of the gaming community
07:18where normally there's excitement
07:20right around this time.
07:21Luke says these pricing trends
07:23are slowly changing
07:24the landscape of gaming.
07:25I think they're going to start
07:27to basically sell consoles
07:28like they sell cell phones
07:29where it's just,
07:30yeah, you get on a two-year,
07:31three-year plan or whatever
07:32and that's just how it is
07:33because it is just getting to a point
07:35where it's just not affordable
07:36for people to own it outright.
07:37There's just not that many people
07:39that can afford,
07:40especially right now,
07:41a $1,200 to $1,500 console
07:43when all is said and done.
07:44It just doesn't work.
07:46Like, the math isn't there.
07:47The thing is,
07:48Microsoft, Xbox's parent company,
07:50is one of the companies
07:51investing heavily
07:52in data center expansion.
07:54Business Insider mapped out
07:551,416 built or approved
07:58data centers after June 2026.
08:0153 of those were built by Microsoft
08:03and many of them are massive.
08:05Of the companies we tracked,
08:07only Amazon surpassed Microsoft
08:09in large-scale data center construction.
08:12Microsoft expects to spend
08:14roughly $175 billion
08:16on AI in 2026 alone.
08:18So if Microsoft is buying
08:20enough HBM chips
08:22to run its data centers,
08:23why won't it do the same
08:24for its gaming division?
08:26The issue is,
08:27there simply aren't enough chips
08:28to go around.
08:29Even the most powerful companies
08:30are struggling to get their hands
08:32on the shrinking supply.
08:33Apple is one of,
08:35if not the largest purchaser
08:37of a lot of these
08:38like memory modules and stuff,
08:40at least for consumer-facing hardware
08:42in the world.
08:44And so for them to be facing
08:45the same difficulties
08:46with acquiring the pieces
08:49that they need
08:50to build their electronics
08:51is pretty remarkable.
08:53Apple has kind of lost control
08:55of the computer supply chain
08:58a little bit lately
08:59because it doesn't have
09:00a lot of AI data centers.
09:02Rising memory prices
09:03are hitting the people
09:04who rely on storage
09:05to make a living.
09:07Atlanta commercial photographer
09:09Alan Cooley says
09:10he typically spends anywhere
09:11from $15,000 to $20,000
09:14on storage devices each year.
09:16The biggest price hikes
09:17he's noticed
09:18are for solid-state drives.
09:20These are more traditional SSDs
09:23or solid-state drives
09:24that I use.
09:25This is a 4-terabyte SanDisk.
09:27This is a 2-terabyte SanDisk.
09:29These are Samsungs.
09:31They're T7s.
09:32These T5 drives,
09:33these are like 1-terabyte.
09:35Just these 7 drives alone
09:36is over $6,000 to $7,000.
09:37When I bought them,
09:39they were probably
09:39about $1,500 all in.
09:42This is a 500-gig CFast card.
09:44I use this when I'm doing
09:46stuff with my cinema cameras.
09:49My photo cameras will use
09:51CFast or CF Express cards
09:53and they'll also use SD cards.
09:55All in, everything you see here
09:56is about $7,500.
09:57If we were to go up to 200%,
09:59which is something
10:00I've definitely seen,
10:01we're talking about,
10:03what is that,
10:04$21,000, $22,000
10:06for the same stuff
10:07that was just $7,000?
10:09That's it.
10:10I could not have bought
10:11half of this stuff
10:12if the numbers were that high.
10:14We had Alan compare
10:15the prices he paid for storage
10:16in the past
10:17with what they'd cost him today.
10:19So I'm looking at
10:21the blue 4-terabyte Samsung T7.
10:27It is currently $889,
10:30and that's a sale,
10:31but because it's actually
10:33$1,144.99,
10:36when I go to my receipt
10:38for these drives,
10:39I bought it at the time
10:41for $285.
10:43That $285 drive
10:45is now well over $1,000.
10:49I purchased this drive
10:50on April 19th of 2025.
10:53April 19th of 2025
10:55till July of 2026,
10:59we're talking about
11:00it has gone up over 200%.
11:03Crazy.
11:03But when I scroll through here
11:05and I see the prices
11:06of SSDs today
11:08and the idea
11:09that they expect me
11:10to use my hard-earned money
11:11to pay this much
11:12for something
11:13that was, whatever,
11:15200% cheaper
11:16just last year alone,
11:18they are bugging.
11:19Like Apple and Xbox,
11:21photographers could soon
11:23feel forced
11:23to pass rising storage costs
11:25onto their clients.
11:26I am in this actual moment
11:29blown away.
11:31These prices aren't
11:32tethered to new technology.
11:34It's not that they went up
11:35because they've become
11:36so exponentially better
11:37than they were.
11:40Alan's story is identical
11:41to the ones Jeff Hirsch
11:43has been hearing
11:44from his customers too.
11:45They say,
11:46well, I don't understand this.
11:48Last year,
11:49this was only a $50 memory card.
11:53Now it's over $100?
11:55Why?
11:57Jeff is the president
11:58of PhotoCare,
11:59a camera store in New York
12:00established in 1968.
12:02He says prices
12:02for memory cards
12:04and solid-state drives
12:05have doubled
12:06since the beginning of 2026.
12:08Solid-state drive
12:09became a standard
12:10and it's actually
12:11small now,
12:12one terabyte.
12:13So this right now
12:15is over $300
12:18and eight months ago
12:20before the turn of the year,
12:22it was maybe $170.
12:24One customer
12:25that was shooting a movie
12:27bought cards
12:29that were effectively,
12:30say, $500 a card
12:32last year.
12:33The last time
12:34that person
12:35bought more cards,
12:36they were $1,300 a card.
12:39He says the high prices
12:40for memory
12:41have put financial pressure
12:42on his clients
12:43who depend on them for work.
12:45It's just a tough spot
12:47right now
12:48for people
12:49that are using
12:50electronic cameras
12:52in making their living.
12:55We've seen
12:55our media sales numbers
12:58as far as quantity
13:00decrease by 30%.
13:04Jeff worries
13:05recent price hikes
13:05could have broader
13:06implications for the industry.
13:08I don't want to say
13:09it's putting electronic media
13:11out of reach
13:12of some people,
13:13but it is
13:15coming close to that.
13:19So is there any relief
13:21in sight?
13:22Possibly.
13:22One solution
13:23is to open more chip factories,
13:25known as fabs,
13:26to increase supply.
13:27But opening a fab
13:28is not cheap.
13:29The cost of building one
13:31is estimated
13:31between $15 billion
13:33and $20 billion.
13:34The majority
13:35of that cost
13:36comes from
13:36the expensive machines
13:37needed to make
13:38these chips.
13:40Just one
13:41costs up to $400 million
13:42and a single facility
13:44needs rows and rows of them.
13:46Keeping fabs clean
13:47is also very expensive.
13:49Many require
13:50specifically designed
13:51clean rooms
13:52to protect
13:53sensitive silicon wafers
13:54from dust
13:54and other airborne particles
13:56that could cause
13:57microstopic defects.
13:59And even if the cost
14:00of construction
14:01weren't an issue,
14:02it would still take
14:03three to five years
14:05to build a single fab.
14:06You can't just flick a switch
14:08and say,
14:08we're going to double
14:09the amount of memory
14:10chip production
14:11in six months.
14:13SK Hynix told
14:14Business Insider
14:15that it's fast tracking
14:17the construction of fabs
14:18with the Yongin
14:19semiconductor cluster,
14:20which was scheduled
14:21for completion in 2045,
14:23but has been moved
14:24up to 2023.
14:25Some critics believe
14:26the memory shortage
14:27may be manufactured.
14:29In June 2026,
14:3117 plaintiffs filed
14:32a class-action
14:33antitrust lawsuit
14:34alleging that Micron,
14:36Samsung,
14:36and SK Hynix
14:38work together
14:38to limit memory supply
14:40and drive up prices.
14:42This is not the first time
14:43these companies
14:44have been in hot water.
14:45In the early 2000s,
14:46Samsung and Hynix
14:48pleaded guilty
14:49to conspiring
14:49to fix jam prices.
14:51Micron admitted
14:52to participating
14:53in the same conspiracy,
14:54but escaped prosecution
14:55by cooperating
14:56with federal investigators.
14:58When that type of demand
15:00hits an industry like this,
15:02there's a lot less leeway
15:04and there's really
15:05a lot more control
15:06that these three
15:07or four companies
15:07exert over the industry.
15:09Sometimes that's okay,
15:10but sometimes it's
15:11really, really damaging
15:12and it'll be up to
15:13the people involved
15:15in this lawsuit
15:15to prove those damages
15:17beyond a reasonable doubt.
15:18Another solution
15:19would be slowing
15:20the expansion
15:21of AI data centers
15:22to help chip production
15:24catch up.
15:24And that push is growing.
15:27Data centers have faced
15:28growing backlash
15:29from communities
15:30across the U.S.
15:31for their long-term effects
15:32on both the environment
15:33and the economy.
15:34If AI data center construction
15:36slows by half
15:38or it takes twice as long
15:39to develop these things
15:41or if fewer of them
15:43actually get done
15:44or actually get approved,
15:45then you could really
15:46have a change
15:47in AI demand
15:49for memory chips for sure.
15:51On July 18, 2026,
15:54142 protests
15:55opposing data center build-outs
15:57took place
15:57across 42 states.
15:59So far,
16:01dozens of local governments
16:02across the U.S.
16:03have moved
16:03to pause data center construction.
16:05In July 2026,
16:07New York became
16:08the first state
16:09to enact
16:09a one-year moratorium.
16:11This pause
16:13will remain in place
16:14for up to one year
16:15while New York
16:16establishes
16:17the strongest
16:19possible framework
16:20to protect our communities.
16:21If politics
16:23and things like permitting
16:24and things like that,
16:25if those types of issues
16:27slow down AI development,
16:29you could certainly
16:30see a knock-on effect
16:31on demand
16:32for memory chips
16:33and storage.
16:34The only question left
16:35is whether,
16:36in the age of AI,
16:38memory prices
16:38will ever go down.
16:40If what's past
16:41is prologue,
16:42Alistair says history
16:43might give us a clue.
16:45Go back
16:46two or three decades,
16:48the memory chip industry
16:49was hugely cyclical.
16:51So there'd be these huge
16:52boom periods
16:53where demand would go up
16:55and there wasn't
16:56enough supply
16:56and prices would really rise
16:58and memory chip makers
16:59would make massive amounts
17:00of money
17:00and then demand
17:02would slow down a bit,
17:05production would increase
17:06and there'd be oversupply
17:07and then prices
17:08would crash back down.
17:10That type of long-term history
17:11of boom and bust cycles
17:12is very, very hard to break.
17:14We might just make
17:15way too many memory chips
17:17in two years' time
17:18and then prices
17:19will come crashing down again.
17:20I've been doing this
17:21for 20 or 30 years now
17:23and a lot of things
17:24that people thought
17:25would last forever
17:27haven't lasted forever
17:28so I think that's certainly
17:29going to be true again.
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