Apple and Microsoft Hike Device Prices Globally, Citing AI-Driven Component Costs

Australians woke up on Friday to more expensive Macbooks and iPads after Apple hiked prices worldwide, blaming an AI-driven cost-crunch for computer parts.

The iPhone range was unaffected but experts predict Apple will raise prices for its flagship product later this year. Microsoft also lifted its Xbox prices overnight amid a wave of increases for phones and devices.

Apple’s MacBook Air with a 13-inch display now starts at $2,099, up from $1,799, on the Australian website, while the MacBook Pro 14-inch starts at $3,199 on Apple’s site. Both were available for the cheaper price from other retailers as of Friday afternoon however.

There are no longer MacBooks available from Apple for less than $1,000. The smaller MacBook Neo, which arrived in Australia in March at $899, now starts at $1,049 from Apple. The company said at the time the Neo was its “most affordable laptop ever”.

The iPad starts at $749, from $599, while the mini model starts at $949, from $799, the Air at $1,249, from $999, and the pro starts at $1,999, from $1,699.

The iMac desktop now starts at $2,399 and the Mac Studio at $4,299.

Australia retailers have yet to pass on the price increase. Officeworks’ prices were unchanged on Friday morning.

“We regularly review our pricing to ensure we continue delivering great value, and we’re currently working through Apple’s recent pricing changes,” an Officeworks spokesperson said.

JB Hi-Fi promoted Apple deals at the top of its website on Friday, with sales on the MacBook Air 13-inch at $1,597, Macbook Pro 14-inch at $2,797 and the iPad at $495. The tech retailer has warned the rising demand for computers chips as the world rapidly increases computing power and AI usage has pushed up device costs.

Its chief executive, Nick Wells, told analysts in February the cost-crunch was resulting in 20% price rises for PCs and phones were vulnerable to the same price hikes.

The iPhone 17 Pro still starts at $1,999 and the Pro Max at $2,199 on Apple’s website. In February, Wells said iPhones could be hit from September, when the iPhone 18 models will be released.

Apple said it has been absorbing rising computer part costs but had now reached a point where it had to raise prices. Its share price fell 6.15% on Thursday, US time, wiping US$250bn from its market value to close at US$4tn.

“We have never seen a component price increase this much, this quickly,” Apple said in a statement.

Microsoft on Thursday US time also announced it would lift Xbox console prices by US$100 (A$145) for 512GB models and US$150 (A$218) for 1TB models and cease selling the 2TB model.

In a statement, the company said storage and memory prices had nearly tripled and were set to double again by late 2027.

“We hoped another price increase would not be necessary, and we have spent the last several months working with suppliers on options,” Microsoft said.

Datacentres use up significant quantities of memory chips and booming development has led to a shortage dubbed the “RAMageddon”.

An International Data Corporation analyst, Soo Kyoum Kim, warned in a note on Monday the shortage was permanently rewriting the economics of consumer device production.

“The real question is whether the product economics of affordable devices can be rebuilt around structurally higher memory costs, or whether product mix and [prices] shift permanently upward,” Kim said.