New Delhi: Zoho founder and chief scientist Sridhar Vembu has warned that the artificial intelligence investment boom is directly responsible for the sharp rise in smartphone and laptop prices witnessed in 2026, cautioning that the surge could eventually mirror the telecom bubble of the late 1990s.
Writing on social media platform X on Tuesday, Vembu said the “sticker shock” faced by consumers upgrading their devices this year stems from the massive capital flowing into AI infrastructure. “The sticker shock seen by anyone trying to upgrade their smart phone or laptop in 2026? That is the AI investment boom, funded (ultimately) by the mother of all credit bubbles unleashed post pandemic. It has distorted markets ranging from electric power generation, transformers, diesel backup generators, cooling systems, memory, CPUs and of course, GPUs,” Vembu wrote.
According to the Zoho founder, technology companies are pouring hundreds of billions of dollars into AI infrastructure, including servers, GPUs, networking equipment and high-performance memory. This has forced chip manufacturers to prioritise production of specialised components such as high-bandwidth memory for AI data centres, leaving consumer electronics makers competing for a shrinking pool of supply.
Reacting to a report showing memory prices have jumped 500 per cent over the past 12 months, Vembu said the situation was making it increasingly difficult to run a business. “Memory prices, along with AI token prices, have made business very difficult. We have held back from raising prices but it is becoming hard,” he said, adding that Zoho had so far absorbed the additional costs rather than passing them on to customers.
Industry data appears to support his concerns. Average prices of certain DDR5 RAM kits have reportedly risen more than fourfold between August 2025 and August 2026, while some high-capacity kits now cost nearly ten times their lowest tracked prices. Research firm IDC has also flagged that the diversion of memory production towards AI-related use is squeezing supplies available for smartphones and PCs, a trend some analysts have dubbed “chipflation” — semiconductor prices rising instead of falling, breaking a decades-old industry pattern.
Vembu further argued that the era of cheap, abundant memory may be permanently over, suggesting the software industry could be forced to rethink long-held assumptions about memory availability that shaped how programming languages were originally designed.
While maintaining that AI technology itself remains genuine and transformative, Vembu cautioned that the investment frenzy surrounding it could still unwind sharply, echoing the fate of the dot-com-era telecom boom.