A 32GB kit of RAM that cost around £70 in September 2025 hit £280 by December. Major PC vendors have confirmed 15-20% price hikes and contract resets.

This isn't a blip. The cause sits in AI data centres, which are hoovering up the world's memory chips. Every wafer allocated to high-bandwidth memory for AI processors is a wafer denied to the laptop or smartphone. IDC expects DRAM supply growth to remain below historical norms through 2026, at just 16% year-on-year. Geopolitical tensions and escalating trade restrictions are also reshaping semiconductor supply chains, with export controls affecting everything from chip manufacturing equipment to design tools. For enterprises with multi-year hardware agreements, the contractual implications could be significant.

At Lewis Silkin, we've seen clients hit with increases between 35% and 50% on existing supply arrangements. Some have sought to exit contracts or ongoing negotiations entirely. Others are scrambling to understand what their agreements actually permit.

The shortage isn't cyclical

The memory market has historically swung between boom and bust. This time, the shift looks like it has become a longer-term problem, or at least structural. The major memory chip manufacturers have pivoted their capacity toward higher-margin enterprise AI components. At least one major manufacturer has exited the consumer market altogether to focus on AI demand. For buyers, this means vendors have less incentive to compete on price. Meanwhile, trade controls on advanced packaging and high-bandwidth memory co-packaging are adding further supply chain complexity.

Industry commentators have offered sensible advice: accelerate planned refreshes, right-size specifications, audit SaaS spend to free up budget. That's useful. But it raises immediate questions about what your existing contracts allow, and what your next contracts should include.

1. Price adjustment clauses

Most IT procurement contracts contain some mechanism for price variation. The question is whether that mechanism works when costs jump 35-50% rather than the 3-5% annual increases many clauses contemplated.

• For buyers: Review whether your contract caps the magnitude of any single price adjustment or limits cumulative increases over the contract term. A clause permitting "reasonable" increases without defining reasonableness gives vendors significant latitude. Consider whether price increases require notice periods, whether you have termination rights if increases exceed a threshold, and whether the contract requires the vendor to evidence their increased costs rather than simply assert them.
• For vendors: If your contracts include fixed pricing or capped adjustments, you may face a choice between absorbing losses or triggering disputes. Examine whether material adverse change provisions, force majeure clauses, or other hardship provisions offer relief. These rarely cover ordinary market fluctuations, but a 500% component cost increase may cross into extraordinary territory.

2. Specification flexibility

One response to higher memory costs is to reduce specifications. Reporting suggests that manufacturers are already offering products with less memory and lower graphics performance at previous price points. That's fine for consumer retail, but enterprise buyers with contractually defined specifications face a different situation.

• For buyers: If your contract mandates 32GB RAM devices, you can't unilaterally accept 16GB units - but you might want to. Check whether your contract permits agreed variations, and what approval process applies. Consider negotiating pre-approved specification tiers for future orders, with corresponding price adjustments.
• For vendors: Proposing reduced specifications to manage costs requires care. A unilateral change may breach the contract. Document any buyer agreement thoroughly, and consider whether the change affects warranties, service levels, or other dependent obligations.

3. Volume commitments and order flexibility

Many procurement contracts contain minimum volume commitments, often negotiated in exchange for better pricing. When hardware costs spike, buyers may want to defer purchases or reduce quantities.

• For buyers: Review your minimum purchase obligations and any penalties for shortfall. Some contracts permit deferrals within limits; others treat any reduction as breach. If you're considering extending the life of existing hardware rather than refreshing on schedule, understand whether that affects your contractual position.
• For vendors: Buyers attempting to avoid volume commitments may expose you to supply chain costs you can't recover. Your contracts should address whether committed volumes remain binding regardless of market conditions, and what happens to reserved inventory if orders don't materialise.

4. Delivery and lead times

Supply constraints don't just affect price - they also affect availability. Some memory suppliers have paused issuing price quotes entirely, signalling expectation of further increases. When components are scarce, delivery timelines stretch. Geopolitical factors are exacerbating this: advanced packaging technologies have become strategic targets for export controls, and companies may face longer qualification, upgrade, and installation cycles for chip equipment.

• For buyers: Check whether your contract includes delivery guarantees or liquidated damages for late supply. Understand the circumstances in which the vendor can extend delivery without liability. Force majeure clauses rarely cover supplier pricing decisions, but they may cover genuine supply interruptions.
• For vendors: If you can't obtain components to fulfil orders, you need clarity on whether that excuses performance. Review your upstream supplier contracts alongside your customer contracts. A gap between what your supplier owes you and what you owe your customer creates risk you'll bear alone.

5. Termination rights

When market conditions shift dramatically, both parties may want to exit. The question is whether they can.

• For buyers: Some contracts permit termination for convenience, subject to notice and perhaps a termination fee. Others restrict termination to breach scenarios. If you're locked into unfavourable pricing, your options depend entirely on what you negotiated.
• For vendors: Buyer termination rights become more valuable to buyers when your prices increase. If your contract doesn't require buyers to take contracted volumes before terminating, a price increase may simply accelerate their exit. Consider whether price adjustment clauses and termination provisions work together sensibly.

Renegotiation and good faith

Not every situation fits neatly within existing contractual provisions. Where market shifts are severe, parties sometimes negotiate amendments outside formal mechanisms.

English law imposes limited obligations to renegotiate in good faith, but many commercial contracts include express renegotiation or "meet and confer" provisions. These may require the parties to discuss material changes in circumstances before either party can terminate or pursue other remedies.

If your contract lacks such provisions, informal renegotiation depends on commercial leverage and relationship quality. Documenting any agreed changes properly matters enormously – supposedly ‘mutual’ understandings, whether verbal, by email, or hidden in a WhatsApp chat, about revised pricing or specifications frequently become disputes.

What to build into new contracts

If you're negotiating new IT hardware agreements in this market, several provisions deserve attention.

• Price adjustment bands: Cap the magnitude of any single adjustment and the cumulative adjustment over the contract term. Require vendor documentation of cost increases, not merely assertions.
• Specification flexibility: Build in pre-approved alternatives at different price points, where possible. Agree the process for proposing and approving variations.
• Volume flexibility: Consider ranges rather than fixed commitments, or build in quarterly true-up mechanisms that acknowledge demand uncertainty.
• Termination triggers: Include express termination rights if price increases exceed defined thresholds, with appropriate notice periods.
• Supply chain transparency: Require vendors to notify you of supply constraints, anticipated delays, or any export control or trade restriction issues affecting their supply chain, with sufficient lead time to adjust plans.
• Audit rights: Particularly relevant where price increases must be cost-justified, audit rights allow buyers to verify vendor claims.

The broader picture

The memory shortage reflects something larger: AI infrastructure is absorbing manufacturer resources, attention and capacity that was previously devoted to consumer and enterprise devices. Geopolitical tensions are accelerating this shift, as trade controls on semiconductor technologies create additional supply chain chokepoints. Whether that's permanent depends on capacity expansion, how AI demand evolves, and whether international trade relations stabilise.

For now, both buyers and vendors face a market where assumptions embedded in existing contracts may no longer hold. The time to review your position is before the next price notification arrives.

We regularly advise clients on technology procurement, supply chain agreements, and commercial disputes arising from market disruption. If you're navigating these issues, we're happy to talk through what your contracts permit and what your next ones should say.