HP says memory’s contribution to PC costs just doubled to 35 percent
The Register
February 25, 2026
AI-Generated Deep Dive Summary
HP Inc. has reported that memory now accounts for 35% of its PC production costs, up significantly from 15-18% last quarter. The company attributes this rise to its efforts to secure long-term supply agreements, qualify new suppliers faster, and optimize inventory management. These strategies aim to mitigate the growing impact of rising memory prices on their operations.
HP's interim CEO, Bruce Broussard, highlighted that the company has reduced qualification time for new materials by half, enabling quicker product configuration changes. Additionally, HP is leveraging AI initiatives to streamline its supply chain processes and lower logistics costs through agile planning. The company also emphasized aligning its inventory with customer demand and implementing targeted pricing adjustments to offset cost increases.
Despite the challenges posed by rising memory prices, HP's personal systems division saw strong growth in Q1 2026, with revenue up 11% year-over-year. Consumer PC sales jumped 16%, driven by Windows 11 adoption and surging demand for AI-powered PCs, which now make up 35% of HP's sales. The company is collaborating with over 100 software developers to optimize applications for these AI-driven systems.
However, the print division experienced a 2% revenue decline, though it maintained a strong 18.3% operating margin. Overall, HP reported $14.4 billion in quarterly revenue, up nearly 7% year-on-year. While non-GAAP earnings per share met expectations, CFO Karen Parkhill cautioned that full-year results may lag due to ongoing supply chain challenges and rising memory costs.
HP's shares dropped 6% in after-hours trading, reflecting investor concerns about the company's ability to sustain growth amid a volatile business environment. Despite these headwinds, HP's focus on AI-driven innovation and strategic supplier management positions it as a key player in shaping the future of PCs and enterprise tech.
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Originally published on The Register on 2/25/2026