Dive Brief:
- HP continues to grapple with rising component costs amid an industrywide memory chip shortage, the PC vendor said Tuesday, during a Q1 2026 earnings call for the three months ended Jan. 31.
- The company saw memory costs spike 100% compared with the prior quarter and expects further increases as the year goes on. Memory and storage component costs will rise to 35% of HP’s PC production costs this year, up from roughly 15% to 18% during FY2025’s final quarter, according to CFO Karen Parkhill.
- “We are taking targeted pricing actions to offset the remaining cost impact in close partnership with both our channel and direct customers,” said interim CEO Bruce Broussard. “We expect this volatility to remain throughout fiscal ’26 and likely into fiscal ’27.”
Dive Brief:
As Big Tech gobbles up chips fresh off the assembly line in an ongoing AI spending spree, shortages have become a major challenge for HP and other OEMs. Common components, including direct random access memory and NAND flash chips used in off-the-shelf PCs and other devices, are a particular pain point.
“Like others, we are seeing increased input costs driven primarily by the rising prices of DRAM and NAND,” said Broussard, who stepped into the interim role when longtime HP executive Enrique Lores left the CEO post earlier this month. The search for a full-time replacement is underway, Broussard said.
In the meantime, the company has instituted a three-pronged strategy to manage chip shortages and mitigate price increases. HP leaned on suppliers to meet its memory requirements for the rest of the year and leveraged AI to lower logistics costs, according to Broussard.
“We are also configuring our products and shaping demand to align the supply we have with our customer needs,” he said. “We've demonstrated this during the pandemic and more recently through trade cost uncertainty. We built a more resilient supply chain and leverage our strong brand and distribution strength to gain share and expand margin.”
The company is also using AI to upgrade its channel partner processes. Broussard indicated that HP would be deploying a digital assistant to answer questions, act on queries and proactively guide partner procurements.
Analyst firm Omdia, a Channel Dive sister company, expects 2026 to be “a year defined by disruptive hardware shortages,” according to a February report, and partners are already feeling the pinch.
Lenovo warned its channel partners of looming price increases earlier this week, CRN reported, and Hewlett Packard Enterprise, which separated from HP in 2014, plans to raise server prices to offset rising memory chip costs. Cisco indicated during an earnings call this month that it would revise some partner contracts in response to the situation.
“We are working hard to mitigate these headwinds,” Parkhill reassured investors on Tuesday. “We have a combination of product cost actions, companywide cost actions and price increases to help us recover that entire impact over time.”
