By Linet Amuli - Reporter
Kenya, January 22 2026 - The explosive build-out of artificial intelligence infrastructure is increasingly coming at the expense of everyday consumer electronics, as memory chip supplies are diverted toward higher-margin data centers, pushing up prices and choking demand for smartphones, personal computers and gaming consoles.
U.S. tech giants including OpenAI, Alphabet-owned Google and Microsoft have absorbed a growing share of the world’s memory chip output to power AI models and cloud computing capacity. That shift has strained supply chains and driven sharp price increases, forcing device makers from Britain’s Raspberry Pi to HP Inc to raise prices or absorb rising costs.
The impact is beginning to show across global markets. Research firms IDC and Counterpoint now expect worldwide smartphone shipments to shrink by at least 2% this year, reversing earlier growth forecasts and marking the first annual decline since 2023. The personal computer market is projected to contract by at least 4.9% in 2026, following growth of more than 8% last year, while global gaming console sales are expected to fall 4.4% after strong expansion in 2025, according to TrendForce.
At the heart of the slowdown is a supply chain recalibration that increasingly favors enterprise customers over consumers. The world’s three largest memory chipmakers (Samsung Electronics, SK Hynix and Micron) have reported strong earnings in recent quarters as demand from AI and data center operators surged, even as they acknowledged difficulties keeping up with orders.
But those gains upstream are rippling through consumer markets. Memory prices are expected to rise a further 40% to 50% in the first quarter, following a roughly 50% increase last year, Counterpoint estimates. Semiconductor distributors say price inflation for certain products has reached extreme levels.
“Manufacturers might absorb some costs, but given the scale of the shortage, it is certainly going to show up as higher prices for consumers,” said Jacob Bourne, an analyst at Emarketer. “That will result in more muted consumer device sales in 2026.”
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The pressure is most acute for low- and mid-range device makers, which operate on thinner margins and have less pricing power. Companies such as Xiaomi, TCL Technology and Lenovo are more exposed than premium brands, analysts say, as rising component costs threaten to price budget-conscious consumers out of the market. TrendForce previously reported that Dell and Lenovo were considering price increases of up to 20% early in 2026.
Electronics retailers are also bracing for weaker demand. Best Buy has warned that higher prices, compounded by tariffs, could deter consumers already grappling with broader inflation.
Some companies are better positioned to weather the squeeze. Apple’s scale, long-term supplier contracts and pricing power give it greater flexibility to absorb higher input costs, analysts say, even as it faces pressure to protect margins.
Still, the broader picture underscores a growing divide in the global tech economy: while AI infrastructure continues to expand at breakneck speed, the consumer devices that once drove industry growth are slipping into contraction, crowded out by an AI boom that is reshaping who gets silicon, and at what cost.
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