DRAM it! Cheap PCs being priced out of existence as memory cost bites

Fewer Americans are buying PCs as rising component costs mean the sub-$500 bracket is rapidly disappearing, with laptop makers favoring higher-end machines - and things are likely to deteriorate throughout the year. According to stats compiled by Omdia, unit sales to US distributors plunged 7 percent year-on-year in Q1 to 15.8 million units. HP was hit hardest, shrinking by more than a fifth and losing its spot as the most purchased PC brand stateside. The decline reflects supply constraints and cost pressures from memory and storage prices, "compounded by a hangover following the Windows 11 refresh cycle," which the analyst said exhausted much of the near-term commercial pipeline. A strong comparison period from a year ago - when consumers and businesses pulled forward purchases to avoid Trump's tariffs - didn't help. As Reg readers know, memory makers are diverting production capacity to chips used in higher-priced AI servers, which is squeezing supplies of DRAM and NAND for PCs and smartphones. Rising component costs are eroding vendor margins on entry-level devices, making them commercially unviable. Unit sales of sub-$500 PCs dropped 18.7 percent in Q1. Supply is not likely to improve and US PC shipments for 2026 are forecast to shrink 14.4 percent compared with 2025. Consumers led the decline: the segment fell 9.5 percent year-on-year in Q1 and is expected to drop 11.2 percent for the calendar year. "Many consumers delayed purchase decisions amid higher price tags and challenging economic conditions," said Scott Braverman, senior analyst at Omdia. Omdia reckons memory costs are likely to "keep entry-level prices elevated through 2027, suppressing consumer demand." Biz PC shipments fell 5 percent, a better performance than the market overall, as some enterprises continued to replace Windows 10 machines and brought forward purchase orders in anticipation of further price hikes. The average selling price of a US PC surpassed $1,000 during the quarter, up 4 percent from a year ago, though it is expected to rise by up to 12 percent by December due to "supply-side headwinds" and a growing share of AI PCs. Ticket prices on business machines are estimated to grow 12 percent this year. Dell leapfrogged HP to become top dog in the US PC shipment stakes after it grew 1.1 percent. Lenovo closed the gap in third place on the back of 1.2 percent growth in shipments. (R)