Memory costs have jumped from less than one-fifth to more than one-third of HP's laptop production expenses, marking an unprecedented shift in PC manufacturing economics.
The company's CFO Karen Parkhill revealed during its Q1 2026 earnings call that memory and storage now represent roughly 35 percent of HP's PC bill of materials, doubling from the 15 to 18 percent range reported just last quarter.
Parkhill confirmed price increases will follow as HP navigates what interim CEO Bruce Broussard called "industry-wide headwinds." Broussard expressed confidence that "the market will rationalize over time," but acknowledged the company faces continued pressure through fiscal year 2026 and likely into 2027.
The memory crisis extends beyond HP, affecting the entire PC industry as AI infrastructure demands strain global supply chains. Three companies, Samsung Electronics, SK Hynix, and Micron Technology, control approximately 95 percent of global DRAM production, creating concentrated bottlenecks when data center operators place massive orders for AI server components.
Memory manufacturers are posting record profits amid the shortage. Samsung Electronics forecasts operating profit roughly around $13.8 billion for Q4 2025, up dramatically from $4.5 billion in the same period last year.
SK Hynix reported its highest-ever quarterly performance in Q3 2025 with operating profit reaching $7.8 billion.
HP expects its financials to be most severely impacted by RAM shortages in the second half of its fiscal year. The company reported fiscal 2026 first quarter net revenue of $14.4 billion, up 6.9 percent from the prior-year period, but warned that higher component costs would hurt customer demand moving forward.
Other PC manufacturers are exploring alternative strategies to manage rising costs. Acer EMEA Marketing Director Manuel Linning told Tom's Guide the company is "looking at multiple smaller vendors" to bypass major suppliers prioritizing AI customers over consumer electronics companies. The company views Chinese suppliers like CXMT as potential solutions to improve memory availability for laptops and desktops.
Asus Director of Technical Marketing Sascha Krohn believes memory shortages should "start to normalize" by 2027 but noted a critical industry dynamic:
"Nobody wants to be the first one to lower prices."
This hesitation could prolong elevated pricing even as supply constraints ease.
Analysts predict continued volatility through 2026 with IDC expecting price hikes of 15 to 20 percent across the PC market. Research firm Omdia reported mainstream PC memory and storage costs rose by 40 to 70 percent in 2025, with those increases being passed directly to consumers.
HP's Personal Systems business delivered $10.3 billion in revenue for Q1 2026, an 11 percent year-over-year increase driven partly by what Broussard called "continued momentum in AI PCs." The company claims approximately 35 percent of recent PC sales were AI-capable models despite broader market skepticism about consumer interest in artificial intelligence features.
