MSI Warns PC Market Could Shrink 20% in Its 'Most Severe Year' Since Founding

Three Root Causes

The price hikes are being driven by three compounding pressures:

• DRAM shortages: DDR5 memory prices have exploded. A single 16GB DDR5 module that cost roughly $40 a year ago has surged to between $170 and $200—a 4–5x increase .
• NVIDIA GPU supply gap: MSI reports it is receiving only about 80% of the GPU allocation it needs from NVIDIA, leaving a roughly 20% supply shortfall .
• AI infrastructure demand: The AI boom is consuming the bulk of available memory and semiconductor production capacity, leaving less wafer allocation for consumer components .

Market Projections and Production Cuts

Huang projected that global consumer PC demand will decline 10% to 20% year-on-year, a more pessimistic outlook than many research firms had forecast . The DIY (build-your-own) market is expected to fare even worse, contracting by more than 20% .

In response, MSI is cutting low-end notebook production by roughly 30% and prioritizing mid-to-high-end products that carry better margins .

CPU Supply: A Potential Bright Spot

Huang offered one piece of cautiously optimistic news: CPU supply should begin improving by the third quarter of 2026, as AMD refocuses on desktop processors and Intel ramps up its production output .

Financial Response: Margin Recovery and Long-Term Contracts

After suffering severe margin compression in 2025, MSI reported that its gross margin recovered to around 15% in the first quarter of 2026 . To protect against future memory price volatility, the company is actively pursuing three- to five-year supply contracts with DRAM manufacturers, aiming to lock in pricing and secure guaranteed allocation .

June 2026 Shareholders' Meeting: Chairman Hsu Hsiang's Update

Speaking after the company's June shareholders' meeting, MSI Chairman Hsu Hsiang reinforced the gravity of the situation. He confirmed that the memory shortage remains severe, with prices on certain components rising sharply since the beginning of the year, which is both increasing costs and making customers more cautious about placing orders .

Hsu also announced that MSI will supply NVIDIA's new RTX Spark AI computers—two laptop models and one small desktop—with mass production beginning by the end of the third quarter of 2026 . While the company's AI server revenue currently accounts for just 3–5% of total revenue, Hsu said he expects that figure to double in 2026 and grow 50% to 100% annually over the next three to five years .

The Broader Industry Picture

The pressures MSI described are not isolated. Industry-wide data tells the same story.

Memory Market Surge

According to Omdia research, global memory revenue surged roughly 70% year-on-year, driven by AI demand for high-bandwidth memory (HBM) and DDR5. SK Hynix, a major memory manufacturer, has roughly doubled its wafer capacity to meet AI memory requirements .

PC Shipment Forecasts

IDC has forecast an 11.3% year-on-year decline in global PC shipments for 2026, with conditions expected to worsen through the fourth quarter as the component shortage shows no near-term relief . This aligns with Huang's earlier 10–20% contraction projection.

No Quick Relief for Consumers

Executives across the industry see no meaningful relief for the consumer market before late 2027 at the earliest. AI-driven demand continues to absorb memory and wafer capacity, leaving little room for consumer-focused production to recover .

What This Means for PC Buyers and Builders

For anyone planning to buy a prebuilt gaming PC, upgrade a graphics card, or build a new system in 2026, the outlook is challenging:

• Higher prices through at least Q1 2027. MSI's 15–30% increases are rolling out over nine months, meaning peak pricing will hit in late 2026 and early 2027 .
• Fewer budget options. With low-end production cut by 30%, entry-level gaming laptops and budget GPUs will be harder to find .
• CPU availability should improve. By Q3 2026, AMD and Intel are expected to deliver better desktop CPU supply, which may ease one component of the overall cost equation .
• Memory prices may stay elevated. With MSI chasing three- to five-year supply contracts, the company is effectively betting that DRAM prices won't return to 2024 levels anytime soon .