HP Inc has revealed that memory (or RAM) now accounts for 35% of the cost of materials it needs to build a PC – up from between 15 and 18% last quarter. One of the biggest PC-makers in the world said that it expects RAM’s contribution will rise through the year. Speaking on the company’s Q1 2026 earnings call, CFO Karen Parkhill delved out numbers, saying that the company expects its Personal Systems Operating Profit (PSOP) margins will be below the long-term range.“We have seen memory costs increase roughly 100% sequentially, and we do forecast that to further increase as we move into the fiscal year. To put this in a little bit more concrete terms, we did share last quarter that memory and storage costs made up roughly 15%-18% of our PC bill of materials. We now currently estimate this to be roughly 35% for the year,” said Parkhill. “As we’ve said, we expect to see that largest impact in the second half. Because of that, we also said that we now expect our PSOP margins to be below our long-term range for the rest of the year. That said, we are working hard to mitigate these headwinds. We have a combination of product cost actions, company-wide cost actions, and price increases to help us recover that entire impact over time,” she added.
Interim CEO Bruce Broussard says company secured long-term supply agreements
Despite this, the company’s interim CEO Bruce Broussard painted a positive picture, saying that the company has secured long-term supply agreements for the year and also “qualified new suppliers [and] built in strategic inventory positions for key platforms and cut the time to qualify new material in half to accelerate our product configuration changes.”The company is also “configuring our products and shaping demand to align the supply we have with our customer needs” and “taking targeted pricing actions to offset the remaining cost impact in close partnership with both our channel and direct customers.” This essentially means that HP is building a inventory of key parts to avoid shortages, and hints at some price increases for customers to offset the expensive memory.Broussard also emphasised that the company has also “expanded lower-cost sourcing across our commodity basket, lowering logistics costs with agile end-to-end planning processes.”The company reported $10.3 billion revenue from its personal systems division – up 11% year-over-year. Further, consumers bought 14% more PCs than in the previous year, sending revenue up 16%. According to Ketan Patel, HP Inc’s president for personal systems, Windows 11 adoption pushed PC sales, and 35% of the PCs HP sells now AI PCs.“The local models on AI PCs started to deliver results, with more and more ISVs developing applications, which are using [AI] locally and more effectively than ever before,” he said.
