PC supply chain survey: Pricing game after storage surge, Dell HP Lenovo (00992) all plan to raise prices

In the major global distribution centers for electronic products, PC manufacturers are planning to adjust their price lists for the next quarter. The major PC brands worldwide are recalculating the cost structures of various mainstream models, with the biggest changes coming from storage chips. With the continuous rise in prices of DRAM and NAND storage chips, the profit margins of the entire PC industry are being tested. Both HP and Dell, ranked second and third respectively in global PC market share, have issued warnings that memory chips are expected to face significant shortages and inevitable price increases by 2026. Dell's Chief Operating Officer, Clarke, stated that while Dell will optimize product configurations to meet the challenges, the ultimate cost will be passed on to end customers, with some products possibly being repriced. He said in an analyst conference call, "We have never seen costs rise so rapidly." HP's CEO, Enrique Lores, expects the second half of 2026 to be the most tense period in terms of supply, and the company is prepared to raise prices if necessary. He revealed that memory costs currently account for 15% to 18% of the typical PC total cost. As the world's largest PC shipper with a market share exceeding 25%, LENOVO GROUP (00992) is studying the possibility of raising prices for some end products at the "appropriate time" to cope with the increasing cost pressure. This move has not been publicly announced yet, but its necessity has become a consensus within the industry. Several supply chain sources have indicated that the price increase plan has been basically confirmed, while the specific details of the increase are still to be determined. In the past year at least, global memory chip prices have shifted from short-term fluctuations to systematic increases. The demand for AI servers and data centers has almost consumed most of the high-value-added storage, including HBM, while the capacity of the traditional DRAM and NAND that PCs rely on has been forced to shrink. Data from multiple research institutions shows that the prices of some products have increased by over 100% within a year, and models in short supply have even experienced multiple price increases. For PC manufacturers, memory components are one of the few key costs that are "non-linear" in terms of pricing. If the increase in DRAM or NAND prices in a single quarter is too high, it will erode the gross profit margin of the entire PC manufacturer. As a global industry giant with a market share exceeding 25%, LENOVO GROUP has tended to smooth out cost fluctuations between the upstream and downstream through scale procurement, supply chain scheduling, and inventory strategies. However, the high increase in memory chip prices in this round is causing the cost of "smoothing" to rise. Insiders close to LENOVO GROUP's channel business believe that Lenovo may consider differentiated price increases for different regions and different product lines, stating that "prices will definitely rise, its just about choosing the right market window." Financially speaking, the justification for raising prices is sufficient. The increase in memory chip costs has already begun to be reflected in the current quarter's gross profit margin through inventory cycles. If end prices remain unchanged, PC manufacturers will face significant pressure on profit margins over the next two quarters. Once prices are raised, this passive erosion will be immediately stopped. An industry analyst who has long tracked the PC industry believes that LENOVO GROUP is in the upper reaches of the industry price game, and for them, raising prices is not a risk but a certain profit tool. According to an earlier report by Bloomberg, to cope with the supply shortages caused by the artificial intelligence boom, LENOVO GROUP has stockpiled memory and other key components. Winston Cheng, the company's Chief Financial Officer, stated in a Bloomberg TV interview on November 24th that "Lenovo's current component inventory is about 50% higher than usual." Regarding whether the increase in storage chip costs will lead to a transmission to end prices, a related person from LENOVO GROUP previously responded that the company is ensuring supply stability through excellent operations, leveraging its scale and relationships with suppliers, while adjusting pricing to maintain competitiveness. Different manufacturers face different price increase pressures and strategies, and to understand this, we need to start with understanding the customer structures of different manufacturers. Unlike brands that mainly target the retail market, over half of LENOVO GROUP's shipments come from commercial and enterprise customers, which include large multinational corporations, financial institutions, government procurement units, etc. These customers have completely different purchasing rules from the mass market: they care about device lifecycle, security policies, maintenance services, and total ownership costs, rather than short-term price fluctuations of 5%8% on individual models. One person who has participated in multiple tenders for multinational IT groups stated, "If the supplier can guarantee supply, stability, and service, price adjustments can be accepted. For enterprises, the truly expensive part is 'system interruption', not price increases." This means that Lenovo's end price elasticity is higher than the industry average. In addition, its stable position in the government and multinational large customer market gives it a higher bargaining power. In other words, the cost of switching for enterprise customers is very high, once they enter a certain brand's ecosystem, they are not willing to switch easily, giving Lenovo room to adjust prices. According to the latest data from IDC, Lenovo's commercial PC shipments increased by 15.5% year-on-year in the first three quarters of 2025, far exceeding consumer-side growth (13%), further diluting the fixed costs of the company's PC business. In a recent report released by Morgan Stanley on November 17th, it was also stated that Dell and HP are the "most sensitive companies" to the increase in storage prices, and their PC gross profit margins are expected to decline by 2-4 percentage points in the 2026 fiscal year. The report suggests that Lenovo's ability to resist cost impacts in the PC business is significantly better than companies like Dell and HP that rely on consumer channels; Apple, on the other hand, can rely on strong relationships in the supply chain to maintain bargaining power over upstream memory chips. In fact, according to multiple retail channel monitoring reports, there have been small price adjustments for PC products in some regions. Some analysts believe that this is not a case of manufacturers testing the market in advance, but rather that storage costs can no longer be absorbed. The signs of an upward price cycle are becoming increasingly apparent. Against the backdrop of AI server demand continuing to consume vast amounts of storage resources and with no intention of expanding capacity upstream, the upward trend in DRAM and NAND prices may continue into next year. This means that leading manufacturers like Lenovo may need to gradually announce more specific pricing strategies over the next two quarters. "From the supply chain to the end, we observe a new price cycle forming," said a semiconductor industry consulting firm executive, "The pressure this time will ultimately fall on the overall machine prices." For Lenovo, raising prices is not just a passive measure to cope with rising costs, but also an active decision to maintain profitability and industry status. If historical patterns still hold true, this will be a necessary adjustment for the global PC industry before the next technological cycle arrives. Impact on Market Dynamics The overall price increase in storage chips has led to a major restructuring of the cost structure in the PC industry, and the ensuing end-price increase cycle will further impact market dynamics. For manufacturers that rely heavily on the retail market, once the industry as a whole enters a phase of price increases, it means that the market will be more sensitive to prices and channel competition will become more intense. These manufacturers must make difficult choices between profit loss and demand fluctuations, and establish advantages in customer structures, supply chain depth, and cost control capabilities in order to achieve a balance in market share and profitability. Structurally, the squeezing effect of price increases on demand will not be evenly distributed among different manufacturers. Consumer users are the most sensitive to price changes, and every 5%10% increase could lead to longer upgrade cycles and more cautious model choices. As mentioned earlier, the decision-making process of enterprise users is completely different: in a situation where budgets are controllable and IT refresh cycles are fixed annually, enterprise customers are more concerned about the stability of product lifecycles, security policies, backend service capabilities, and supply sustainability. This means that the resistance brought about by price increases will be significantly weakened on the enterprise side. Among many PC manufacturers, Lenovo has the highest proportion of enterprise customers. With over half of its shipments coming from the commercial and enterprise market, the company's demand elasticity during a price increase cycle is much lower than other companies relying on the retail market like HP and Dell. More importantly, for most enterprise customers, as long as the increase is within a controllable range in the total ownership cost, it will not trigger the decision to switch brands, because the hidden costs of switching, such as revalidating security strategies, adapting to IT environments, and restructuring maintenance plans, are often much higher than the price increase of a few hundred dollars. At the same time, manufacturers with deep capabilities in the supply chain will have a unique strategic advantage during a price increase cycle. The aforementioned Morgan Stanley report believes that the current storage chip supply chain is showing a two-tier differentiation: manufacturers with locked-in contracts can maintain lower costs, while those without contracts are forced to purchase at high prices in the spot market, which is the core reason for the differentiation in profits for PC manufacturers as a whole. The report argues that this round of price increases is not a "price issue", but a "supply issue". In other words, the increase in storage chip prices is fundamentally a problem of supply chain deterioration: shortages and delivery delays are forcing PC manufacturers to accept premium purchases. Some manufacturers have not had enough hedging or long-term contract coverage from the first half of 2025 until now, and when spot and contract prices soar, they have no choice but to purchase at higher costs, resulting in a hit to gross margins. Conversely, manufacturers with deep capabilities in the supply chain may benefit in the opposite direction. Leading PC manufacturers globally mostly maintain long-term production partnerships with upstream manufacturers. With the tightening supply of DRAM and NAND, the "cost-locking" effect brought about by this early arrangement will gradually manifest: Compared to other manufacturers who need to replenish stocks at higher prices on a quarterly basis, these manufacturers have a more stable inventory structure, making them closer to being "early beneficiaries of the price increase cycle." During a price increase cycle, they can not only calmly set the pace of price increases, but also stabilize their own gross margins and maintain the continuity of market supply when competitors adjust their promotion efforts due to cost pressures. Industry experience shows that in each round of an upward storage price cycle, the largest manufacturers with the deepest supply chains tend to gain more defensive advantages. From the storage cycles in 2017, 2020, and 2023, it can be seen that there is a similar pattern: the market share of leading manufacturers usually rises, while brands with thinner profits that rely on promotions to drive sales tend to reduce some configurations, delay some new products, and compress channel rebates during a price increase cycle, gradually losing ground in competition with leading brands. Furthermore, price increase cycles often come with structural upgrades in products. As the penetration of AI PCs gradually increases, the purchasing logic of enterprise customers is shifting from "low price priority" to "performance and lifecycle priority". When entry-level product prices rise due to the general market increase, product lines with higher performance and added value are more likely to get priority configuration in budgets. From a global market perspective, manufacturers with the capability to deploy a global market layout have a relative advantage during a price increase cycle. Because these manufacturers can stagger the timing of price increases for different regions, achieve global price distribution, and maintain a stable overall profit curve. For example, Lenovo has long maintained channel depth and market share advantages in emerging markets such as Latin America, Eastern Europe, and the Middle East, giving it stronger pricing power. One predictable market change is that during a price increase cycle, market share will not necessarily flow to the lowest-priced brand, but instead to manufacturers with the most stable supply chain, reliable delivery capabilities, and comprehensive product portfolios. During a period of price increases, customers will prefer the most stable suppliers, not necessarily the cheapest ones. The current supply and demand structure is reaffirming this phenomenon. As the expectation of memory chip price increases is written into purchase agreements for 20252026, many enterprise customers are already starting to lock in supply in advance, similar to Lenovo significantly increasing its share of these early pre-ordered products. In summary, we believe that this round of price increases will not only squeeze the market share of the top PC manufacturers, but will actually have a magnifying effect on them. These manufacturers, through strategic inventory, scale procurement, and a high proportion of commercial business, have a natural moat in cost increase environments; their global channel networks and brand stickiness make them more resilient in demand after price increases; and with the impetus of product upgrade cycles, price increases may even become a catalyst for improving gross margin structures and strengthening industry leadership positions. Therefore, as the overall storage chip price increase cycle compresses industry profit margins, forcing manufacturers to reconsider pricing strategies, the top manufacturers are in a relatively advantageous position. Overall, this round of the storage chip price increase cycle is both a cost pressure and a competitive threshold for the PC industry; it is both an industry challenge and an opportunity for market share expansion.