BT warns of smartphone price rises due to chip shortages from AI boom

AI-driven demand for semiconductor chips is tightening supply and increasing costs across electronics. BT expects shortages as technology firms buy large quantities of memory chips used in datacentres. Price increases are expected to affect smartphone handsets first, with possible spillover to routers. Memory chips are essential for most modern electronics and also support components such as graphics cards. BT expects industry partners to work to reduce pricing impact, but chip shortages will still pressure prices in parts of the market. Premium handset makers have not yet shown increases in observed pricing, but higher costs may be passed to customers. Major device makers have already raised prices or removed cheaper models, and console prices have increased as well.

"BT has said the cost of smartphones could rise as technology companies buy up semiconductor chips because of the boom in artificial intelligence, putting pressure on supply chains. The telecoms company's chief executive, Allison Kirkby, said she was anticipating shortages as tech firms bought large quantities of memory chips to power the datacentres relied on by AI."

"Kirkby said: It's common knowledge that the chip market is under demand by the rise in AI. We are working very proactively with our suppliers. Price increases would mainly hit smartphone handsets, she said, but could also affect the cost of routers. Memory chips are essential for almost every modern item of electronics and are also used in other important components such as graphics cards."

"Kirkby added: I'm sure the industry with its partners will do the best it can to minimise the impact on pricing in the marketplace. But with chip shortages everywhere, that will put pressure on pricing in certain parts of the market, not just in our sector, going forward. 'RAMageddon': is the era of cheap phones and laptops over?"

"She said she had not yet seen price increases from premium handset manufacturers, but expected companies such as Apple to pass higher costs on to customers. I'm sure Apple will do the best to minimise any supply chain weaknesses, Kirkby added. The latest model of Apple's smartphone, the iPhone 17, costs from 799, or 1,099 for the 17 Pro model, while Google's Pixel 10 pro retails for about 1,199."

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