HP warns that memory now makes up around 35% of the cost its PCs, double that of a year ago

Here's another dubious milestone notched up by the memory crisis. The proportion that RAM and storage makes up of the cost of producing an HP PC has doubled this year to 35%.

Specifically, HP's CFO Karen Parkhill was speaking to the usual gathering of highly remunerated bean counters on the company's quarterly earnings call yesterday and spoke thusly:

"I think there are 2 tailwinds, which we are most encouraged with. We've spoken about this, which is Windows 11 and AI PCs, but more importantly, they are giving us a lot of confidence that the demand will continue," Parkhill added, while HP's President of Personal Systems, Ketan Patel, said, "AI PCs have started to deliver results with more and more ISVs developing applications, which are [running] locally and more effectively than ever before."

A promotional image for Samsung's 12 nm-class DDR5-DRAM production, showing multiple DRAM modules on a UDIMM circuit board. — Even the mighty HP can't hold back the rising tide of memory chip price increases... (Image credit: Samsung)

Of course, you could argue these most recent figures cover a period that precedes the most damaging impact of the memory crisis. Indeed, some customers probably brought PC purchases forward for fear of future price rises. The real test will be HP's figures over the next year or two.

On that note, HP's Parkhill sounded a cautious note regarding HP's immediate prospects. "Given an increasingly challenging operating environment, and the time it takes to fully implement our mitigating actions, at this point, we expect to be closer to the lower end of our guidance range. We recognize that the environment remains fluid, and we are pulling every lever available to offset these unprecedented headwinds," she said, indicating that the company's financial performance is now expected to land somewhere toward the lower end of its existing forecasts.

Anywho, it was probably only a matter of time before the big boys in the PC market got hit by the memory crisis. The likes of HP have probably been able to hold off the worst of the component price rises for a while, thanks to existing contracts to source large quantities of memory. But as those contracts run out, the inevitable is happening. And it's likely to get worse before it gets better, despite new memory production capacity due to come online.

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Jeremy has been writing about technology and PCs since the 90nm Netburst era (Google it!) and enjoys nothing more than a serious dissertation on the finer points of monitor input lag and overshoot followed by a forensic examination of advanced lithography. Or maybe he just likes machines that go “ping!” He also has a thing for tennis and cars.

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