Tech giants Apple and Microsoft have imposed significant price increases on some of their best-selling products, citing rising chip costs triggered by rapid growth in the artificial intelligence sector.
Apple has raised prices across its entire Mac and iPad lineup, with most popular models seeing increases of 20 percent or more. The company said it had shielded consumers from rising chip costs until now but has reached a point where it must begin raising prices.
Notable price hikes on Apple products
In the US market, the base model MacBook Air rose from $1,099 to $1,299, while the entry-level MacBook Pro went from $1,699 to $1,999. The iPad Air's starting price increased from $599 to $749, and the iPad Pro from $999 to $1,199.
Apple's entry-level MacBook Neo rose from $599 to $699, while the steepest price increase was on the Mac Studio M3 Ultra desktop computer, which jumped from $3,999 to $5,299.
An Apple spokesperson said in a statement, "The rapid proliferation of AI data centers has created extraordinary demand for memory and storage. We have never seen such a large and rapid increase in component prices before."
Microsoft raises Xbox prices
Microsoft also announced price increases of $100 and $150 on the 512 GB and 1 TB models of its Xbox game console, respectively, citing rising chip prices. The Redmond, Washington-based tech giant said, "We had hoped another price increase would not be necessary and have been working with suppliers on options for the past few months."
Microsoft said console storage and memory prices have more than doubled and are expected to increase further by fall 2027. The company stated, "The entire consumer electronics industry is grappling with the current component crisis, but the effects are being felt particularly hard on consoles."
Market reaction and analyst comments
Apple's stock price fell more than 6 percent following the price increases, marking its sharpest decline since US President Donald Trump announced "Liberation Day" tariffs last April.
Australian consumer technology analyst and commentator Trevor Long said he expects the price increases to affect Apple's sales. In an assessment to Al Jazeera, Long said, "Some products like the MacBook Neo stood out not only as excellent products but also for their pricing. This price hike hits them directly. They are still a reasonable option, but they are getting closer to the prices of competing products."
Long said he expects the coming year to be challenging for leading tech players like Apple, adding, "The critical thing will be the next iPhone and how close they can price it to the previous one. I expect a price increase of between $50 and $150 across the lineup depending on the model."
