[Guest post] Why the next gaming console could cost up to £2,000

By Mark Patrick – Director of Technical Content for EMEA at Mouser Electronics

Manufacturers of semiconductors and components are now facing growing pressure. AI is consuming huge amounts of memory, adding pressure for consumer electronics such as phones, laptops and other devices, which is referred to as ‘chipflation’.

With this in mind, Google searches for ‘why are consoles expensive’ have surged 106% in the past week, highlighting growing concern around why consoles are becoming more expensive.

Mouser Electronics, a leading global distributor of electronic components, has shared its expert take on what is driving chipflation, which everyday electronics could be affected and whether consumers should expect to see prices rise.

What is ‘chipflation’ and why is AI driving it?

Chipflation refers to the growing pressure on semiconductor and component prices as manufacturers face rising demand alongside increasing energy and raw material costs.

According to the Producer Price Index for electronic components and accessories, it rose 27.6% in June from the same time last year*. This is the largest increase on record.

Mark Patrick, Director of Technical Content at Mouser Electronics, explains, “The rapid expansion of artificial intelligence could be creating an unexpected cost for consumers. Demand for the components needed to power AI data centres increases pressure on the wider semiconductor industry. The move towards 800V data centre infrastructure is also increasing demand for analogue components rather than just AI infrastructure centred on GPUs.

Rising energy costs are also a big factor in this ‘chipflation’ because semiconductor manufacturing is extremely energy-intensive.”

The future of chipflation depends on increasing production capacity

Mark says, “Whether chipflation eases will depend on how quickly manufacturers can increase production capacity, how rapidly AI infrastructure expands and whether energy and raw material costs stabilise.”

Experts say some devices are exposed to rising component costs more than others; and these are the top three

Mark explains, “Some consumer electronics could be more exposed to rising component costs than others. Devices that rely heavily on memory, advanced processors and power-management components are likely to be particularly sensitive to changes in semiconductor pricing.”

1.     Smartphones

“Modern devices require a wide range of semiconductors, memory and power-management components, and the growing integration of AI features into smartphones could also increase demand for more advanced processing and memory capabilities.”

2.             Laptops

“Laptops and PCs rely on advanced processors, memory and power-management components, and as AI-enabled PCs become more common, they require more advanced chips and larger memory capacity to run AI features locally. This technology is similar to that used in AI data centres, creating potential supply bottlenecks and making PCs particularly exposed to rising semiconductor demand and prices, or “chipflation.”

3.             Gaming consoles

“Gaming consoles now have the demand for high-quality graphics for the best gaming experience. This therefore requires more powerful hardware and more and complex semiconductor technology. This increases the risk of higher costs of consoles for consumers.”