For years, internet users have been used to receiving routers, set-top boxes, and gateways either for free or at a very low cost when signing up for a service. However, this situation may soon change.
Reports indicate that the cost of DRAM memory used in these devices could increase by as much as seven times. As a result, internet service providers (ISPs) may need to adjust their pricing and offers.
The Impact Of The Supply Crisis
The main reason for this increase is a supply crisis in the DDR4 memory market. Demand from data centers, driven by artificial intelligence, has surged and is affecting almost every part of the tech industry outside of large data centers and hyperscalers.
According to analysts at Counterpoint (thanks Tom’s Hardware), memory used to account for only about 3% of the cost of manufacturing a router. Now, it can represent up to 20% of the total bill of materials.
Unlike major mobile phone manufacturers, companies that produce home networking equipment usually operate with smaller supply contracts. This makes them more vulnerable to sudden price increases, similar to what has happened in the PC market. The situation is made worse because modern networking devices, built to handle higher speeds and advanced features, now include amounts of RAM comparable to those found in entry-level computers.
Although it is unlikely that monthly internet plan prices will rise immediately, other benefits may be at risk. Promotions such as “free installation” could disappear, and equipment that was previously provided at no extra charge may start to carry additional fees or require a separate payment.
Experts also warn that these rising costs could slow down the rollout of fiber optic networks in new areas. If the equipment needed to connect new customers becomes too expensive, providers may delay expansion plans.
