Memory Chip Price Surge Hits Raspberry Pi, Stock Drops 8% Amid Profit Warning

Raspberry Pi Inc. announced Tuesday that recent sharp increases in memory chip prices are expected to erode its profit margins throughout 2026. The company cited the sustained rise in DRAM and NAND flash costs—driven by constrained supply and heightened demand in AI infrastructure and consumer electronics—as a primary factor behind its revised earnings forecast. The warning came amid a broader semiconductor supply chain strain affecting multiple hardware manufacturers, including major players such as NVDA, AMD, and INTC. The company confirmed that its gross profit margin is projected to decline by approximately 3.5 percentage points compared to 2025, with full-year operating margins now expected to fall below 18%, down from an earlier target of 21%. This marks a material shift in financial guidance and underscores the vulnerability of even niche hardware producers to global component pricing volatility. The market responded swiftly, with Raspberry Pi’s publicly traded shares dropping 8% in after-hours trading following the announcement. Analysts noted that the stock’s performance reflects investor concerns over margin compression and the potential for reduced product pricing power, especially in the education and maker communities where Raspberry Pi devices are widely used. The situation highlights growing systemic risks in the semiconductor supply chain, where price spikes in key components like memory chips are now directly affecting non-DRAM producers. The ripple effect is evident in the wider sector, with increased scrutiny on inventory strategies and long-term procurement contracts among hardware OEMs relying on NVDA’s GPUs, AMD’s processors, and INTC’s chips.