There is a number buried in HP's latest quarterly earnings call that should give every Australian planning a laptop or desktop purchase serious pause. Memory and storage now account for 35 per cent of the cost of building one of HP's PCs, up from between 15 and 18 per cent just one quarter ago. In a single reporting period, RAM went from a routine line item to the single biggest cost driver in a personal computer's bill of materials.
HP's CFO Karen Parkhill confirmed the figure on the company's fiscal first-quarter 2026 earnings call, adding that costs had risen roughly 100 per cent sequentially and that the company expects further increases through the year. The personal systems division still posted solid headline numbers, with HP's personal systems division reporting $10.3 billion in revenue, up 11 per cent year-on-year, with consumer PC sales up 14 per cent and corporate PC sales up 9 per cent. But those results arrived on the back of earlier, cheaper inventory. The bill is coming.
Strip away the buzz and the fundamentals show a structural problem, not a cyclical blip. This is not just a cyclical shortage driven by a mismatch in supply and demand, but a potentially permanent, strategic reallocation of the world's silicon wafer capacity. For decades, the production of DRAM and NAND Flash for smartphones and PCs was the primary driver for production. Today, that dynamic has inverted. The voracious demand for high-bandwidth memory by hyperscalers such as Microsoft, Google, Meta, and Amazon has forced the three biggest memory manufacturers, Samsung Electronics, SK Hynix, and Micron Technology, to pivot their limited cleanroom space and capital expenditure towards higher-margin enterprise-grade components.
A Zero-Sum Silicon War
This is a zero-sum game: every wafer allocated to an HBM stack for an Nvidia GPU is a wafer denied to the LPDDR5X module of a mid-range smartphone or the SSD of a consumer laptop. Micron has already exited the consumer memory market entirely, leaving Samsung and SK Hynix as the only major suppliers feeding the consumer DRAM market at scale, and as most people know, less competition almost always means higher prices, especially when demand elsewhere is stronger.
DRAM contract prices increased by 171.8 per cent year-on-year as of Q3 2025, according to figures cited by Tom's Hardware, a rate that now outpaces gold price appreciation. Gartner has flagged an even grimmer outlook: some types of memory have doubled or quadrupled in price since last year, and Gartner believes DRAM and NAND flash used in PCs and phones is set for a further 130 per cent rise by the end of 2026.
For Australian consumers, this is not a distant supply chain abstraction. Industry analysts have flagged potential PC price hikes in the 15 to 20 per cent range, alongside thinner RAM specs on budget and mid-range models. Gartner research director Ranjit Atwal put it bluntly: the budget PC will disappear, simply because vendors won't be able to build them at a price that will satisfy cost-conscious buyers. "Because the price of memory is increasing so much, vendors lose the ability to provide entry-level PCs, those below about $500," he said.
HP's Response: Lock In Supply, Trim Specs, Raise Prices
Interim CEO Bruce Broussard was candid on the earnings call about the steps HP is taking. "We've qualified new suppliers, built in strategic inventory positions for key platforms and cut the time to qualify new material in half to accelerate our product configuration changes," Broussard said. The company has also secured long-term supply agreements covering its memory requirements for the full fiscal year, according to reporting by Tom's Hardware.
CFO Parkhill confirmed that price increases will be coming to offset rising input costs. HP is just the latest in a run of PC manufacturers, including Asus and Acer, that have said prices will go up in response to memory prices. On the demand side, HP's Personal Systems president Ketan Patel framed the company's approach as strategic flexibility, saying HP would "offer different choices to customers" and introduce low-memory configurations. He also pointed to releasing cheaper products stripped of some features.
Broussard's stated belief that "the market will rationalize over time" is the optimistic read, and it is not entirely without basis. Memory markets are historically cyclical: oversupply and undersupply have alternated for decades. Periods of heavy capital investment in new DRAM fabs often lead to oversupply a few years later, collapsing prices; manufacturers then scale back expenditures, leading to undercapacity and price spikes. The memory market experienced downturns around 2012 to 2013 and 2018 to 2019, followed by recoveries. The past offers a template, even if the current cycle is being driven by forces of unusual scale.
Why This Cycle May Be Different
The fair counterargument to hoping for a quick resolution is that AI infrastructure spending shows few signs of abating. IDC expects 2026 DRAM and NAND supply growth to remain below historical norms at 16 per cent and 17 per cent year-on-year, respectively. New fabrication capacity cannot be conjured quickly; building a DRAM fab takes years and billions of dollars. One analyst suggested the peak will arrive in 2026, with prices only settling in 2027 before rising again in 2028.
There is also a legitimate equity dimension to this story that deserves acknowledgement. Rising PC prices are not a neutral inconvenience. For students, small businesses, community organisations, and lower-income households across Australia, a 15 to 20 per cent increase in laptop prices translates to real access constraints. The digital divide, already a documented concern for regional and remote communities, risks widening if entry-level hardware becomes economically unviable to manufacture.
HP's own CFO now expects a sharp double-digit decline in system shipments over the remainder of the year, a signal that the company is bracing for demand destruction as prices rise. That is the market mechanism working as intended, but it is cold comfort for buyers who simply need a functional computer.
The memory crunch is real, its causes are structural, and its duration is uncertain. What is clear is that this signals the end of an era of cheap, abundant memory and storage, at least in the medium term. Whether governments, educational institutions, and businesses adjust their technology procurement strategies accordingly will say a great deal about how well-prepared Australia's digital economy is for a world where AI infrastructure and consumer hardware are now in direct competition for the same chips.