Why "chipflation" is here to stay

Memory chip prices are climbing sharply because artificial intelligence demand is consuming supply at unprecedented rates. Axios reports that the Producer Price Index for electronic components jumped twenty-seven point six percent in June compared to a year ago—the largest surge since nineteen sixty-six, when records began. The cause is clear: AI giants like Meta, Microsoft, and Alphabet are locking up memory supplies through long-term contracts, leaving traditional smartphone and laptop makers competing for dwindling inventory. The impacts are substantial—prices for computer memory have jumped more than six times over the past year alone. Even Apple is exploring chips from Chinese manufacturers to manage the rising costs. What's most striking is that this breaks a seven-decade pattern: from nineteen fifty-seven through twenty twenty, memory costs fell by roughly a factor of ten every five years, but artificial intelligence demand has ended that era of steady decline.

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