Introduction: The AI Boom and the Price Tag Shock
The past year has seen an explosion of powerful Artificial Intelligence tools. Names like ChatGPT and Gemini have gone from niche tech terms to household names, bringing a wave of excitement about the future. But just as this new technology demands more from our devices, a harsh reality has hit home for many South Africans: the shocking price of a new laptop, smartphone, or even basic computer parts.
This is the great paradox of our time. Just as we need more powerful technology to participate in the AI revolution, the hardware required is becoming increasingly difficult to afford. This article explores five surprising and impactful takeaways that explain what’s really happening behind the scenes with technology, our economy, and our daily lives in South Africa.
1. The AI Catch-22: The Technology We Need Is Making the Hardware We Want Unaffordable
The global boom in Artificial Intelligence is directly responsible for a severe shortage and price surge in the essential computer components we all rely on, such as RAM (computer memory) and SSDs (solid-state drives).
The numbers are stark. Global prices for consumer-grade RAM have effectively doubled, while SSD prices have jumped by 50%. One report noted that RAM prices surged by a staggering 171% in the third quarter of 2025 alone.
The reason for this is a massive shift in manufacturing priorities. Chip makers are reallocating their production capacity to focus on high-margin server products for “hyperscalers” like Microsoft, Google, and Amazon, who are building out their AI data centres at a breakneck speed. In a clear signal of this shift, Micron, one of the world’s largest memory manufacturers, announced it was shutting down its well-known consumer brand, Crucial, to better support these larger corporate clients.
As Craig Nowitz, CEO of IT distributor Syntech, explains, this is not a temporary blip.
“What we’re witnessing isn’t just a temporary spike; it’s a structural transformation driven by the explosive growth of AI infrastructure.”
For the average South African, this has dire implications. The dream of a good, affordable budget PC or smartphone is rapidly fading. For businesses, it has created a “procurement nightmare,” with expected price hikes of 20% to 30% on their next fleet of laptops.
2. The Rand’s Volatility Isn’t the Whole Story
It’s a common belief in South Africa that if the Rand strengthens against the dollar, cheaper electronics are just around the corner. While the exchange rate is certainly a factor, the reality is far more complex. A few days or even weeks of a stronger currency won’t translate into immediate price drops on tech shelves.
According to executives at Esquire Technologies, the Rand must maintain its stronger levels for a sustained period—several months at a minimum—before consumers see any real relief.
“The rand must trade at stronger levels consistently for several months before consumers see any noticeable changes in electronics prices… It has to remain at those levels for at least six to 12 months to make any significant impact in the longer term,” says managing director Asgar Mahomed.
Furthermore, because of the Rand’s infamous volatility, importers often use financial tools like “forward cover” to lock in an exchange rate for future purchases. This acts like an insurance policy against a suddenly weaker Rand, but it also means consumers don’t benefit immediately from a stronger one, as the price was locked in months ago. Local price stability, therefore, depends far more on long-term currency consistency than on temporary gains.
3. The Ghost in the Machine: South Africa’s Hidden AI Workforce
Behind the perceived “magic” of sophisticated AI lies a vast, often invisible, human workforce. In South Africa, a growing economy of digital labourers is performing the essential tasks that make AI systems work, such as data annotation (labelling images and text) and content moderation.
This hidden workforce, often made up of young people, is sometimes paid as little as R36 an hour for what can be psychologically taxing work for global tech giants. It is a stark reality that complicates the narrative of AI as a purely automated marvel.
As Rennie Naidoo, research director at the Wits School of Business Sciences, powerfully states:
“Africa is not just participating in the AI revolution. It’s powering it … with something far more indispensable: human labour.”
This creates an uncomfortable irony. In a country battling a staggering 40% unemployment rate, this precarious, low-wage work represents a complex and often overlooked component of the global AI supply chain, raising critical questions about labour, value, and exploitation in the digital age.
4. The Great Affordability Shuffle: Swapping New Cars for Used and Restaurants for Takeaways
As these high-level economic pressures squeeze wallets, South Africans are making clear and measurable shifts in their daily spending habits. Data from Statistics South Africa (Stats SA) reveals a distinct pattern of consumers prioritising affordability and convenience.
In the automotive sector, there is a strong move away from new cars and towards the used market. In January 2025, used vehicle sales were among the positive drivers of motor trade sales. While accounting for 8.8% of total sales, this segment’s resilience is driven by affordability as used vehicle prices have declined while new vehicle prices continue to rise.
A similar trend is reshaping the dining industry. South Africans are dining out at restaurants and coffee shops less, with income in that category seeing a 0.2% decrease in January 2025. In contrast, takeaway and fast-food outlets saw their income surge by 9.3%.
This isn’t just belt-tightening; it’s a direct ripple effect of the global tech pressures, where the rising cost of a new laptop and the decision to buy a used car stem from the same squeezed household budget.
5. A Tale of Two Tech Industries: We’re Losing Factories But Gaining World-Class Data Centres
The state of South Africa’s technology sector is a story of contradictions. On one hand, local electronics manufacturing is facing immense pressure. On the other, the country is experiencing an unprecedented boom in high-tech infrastructure investment.
The casualties of this new reality are stark. Bosco Printed Circuits, one of the country’s largest printed circuit board manufacturers, ceased operations in February 2025, citing intense global competition and local challenges like energy outages. Similarly, manufacturer Microtronix has ruled out producing complex products like smartphones or laptops, pointing to a lack of sufficient policy support for local industry.
Yet, at the same time, global tech giants are pouring billions into the country’s digital backbone. Microsoft, Amazon Web Services (AWS), Visa, and Equinix have all made significant investments in building and expanding world-class data centres in South Africa. Critically, many of these new, power-hungry facilities are being supplied by renewable energy sources.
This paints a picture of a nation making a strategic trade-off: while we may be losing the battle to manufacture the devices in our pockets, we are positioning ourselves to win the race to build the digital highways they run on.
Conclusion: The Real Price of Progress
The story of technology today is not a simple narrative of progress. The AI revolution, for all its promise, comes with hidden costs, creates new economic divides, and forces difficult choices upon everyday South Africans—from the components in our computers to the cars we drive and the meals we eat.
It is a reminder that innovation is not neutral; it reshapes our economy and our society in profound and often unexpected ways. This leads us to a final, critical question. As AI becomes woven into our society, how do we ensure its benefits are shared by all—not just by those who can afford the next upgrade?
