Dive Brief:
- HP Inc. is leveraging its supplier relationships and long-term agreements to help counter memory chip shortages that have dramatically raised prices, executives said.
- The company is also adding new suppliers to its network and cutting the time to qualify new material in half to speed up product configuration changes, executives said in a Feb. 24 earnings call.
- “Our initiatives are focused on securing supply, shaping demand and product configuration, implementing targeted cost reductions and taking pricing actions, and all of these are well on track,” CFO Karen Parkhill told investors.
Dive Insight:
HP is just one of a growing list of computer technology makers confronting price increases in memory and storage chips. Dell, Hewlett Packard Enterprise and Lenovo have all raised prices. Dell has also tightened discounts, and HPE has extended agreements with silicon and memory component providers.
Meanwhile, memory and storage sourcing has tightened across the computer industry as cloud providers and developers buy massive quantities to support AI data center buildouts.
Against this backdrop, HP expects memory and storage to account for roughly 35% of the company's PC bill of materials for the fiscal year, roughly double the percentage in the fourth quarter of fiscal 2025, Parkhill said.
“We have seen memory costs increase roughly 100% sequentially, and we do forecast that to further increase as we move into the fiscal year,” Parkhill said.
To offset the higher costs, HP is securing long-term agreements with suppliers to cover its memory requirements for fiscal 2026, interim CEO Bruce Broussard said in the earnings call. Other measures include qualifying new suppliers and building in strategic inventory positions for key platforms.
HP is also expanding lower‑cost sourcing across its commodity basket, lowering logistics costs through more agile, AI‑enabled end‑to‑end planning, and taking targeted pricing actions in close partnership with channel and direct customers, Parkhill and Broussard said.
