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Epic Games Details How It’s Embracing Generative AI In Unreal Engine

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During The State of Unreal keynote at Unreal Fest on Wednesday, Epic Games revealed just how it’s embracing generative AI in Unreal Engine (UE). Along with offering the first details on Unreal Engine 6 (UE6), the company discussed new features for Unreal Engine 5.8, which it also released on Wednesday. As part of the latest update, Epic is offering an experimental Model Context Protocol (MCP) plugin that will allow developers to hook gen AI models such as Claude and Gemini into Unreal Engine. It’s looking to make the MCP an integral part of UE6.

Marcus Wassmer, the head of Epic’s development team, wrote in a blog post that the gen AI models can act as “creativity and productivity multipliers so that teams can focus their efforts on the essential creative and technical tasks of development rather than time on time-consuming manual tasks.” 

The blog post went on to state that, “our goal for UE6 is to greatly reduce the tedious work in authoring content to leave more time for creative exploration, and increase the amount of iterations a team can make to polish their content. UE6 will ship with tools and workflows where you can choose to bring your own favorite models, battletested against internal development and in UEFN [Unreal Engine for Fortnite].”

Epic gave a demonstration of Claude Code connecting to UE, then pulling objects from an asset library and placing them in a virtual living room. Developers can still move the objects around manually in the UE editor. 

The company also showed how a developer might use Claude Code in UE to build a city that can be automatically adjusted as assets like parks are added. Along with modifying assets, gen AI models can adjust factors like lighting and match atmospheric conditions to real-world examples.

In a video showing off Unreal Engine 5.8, Epic suggested that developers could use the likes of Claude to “automate asset creation, testing and optimization. The plugin can access core UE systems such as blueprints, assets, levels, materials, meshes and many more.”

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It shouldn’t be too much of a surprise that Epic is going all in on gen AI in UE6. Back in November, CEO Tim Sweeney suggested that a “made with AI” tag may be “relevant to art exhibits for authorship disclosure, and to digital content licensing marketplaces where buyers need to understand the rights situation. It makes no sense for game stores, where AI will be involved in nearly all future production.”

In January, the Game Developers Conference published its 2026 State of the Game Industry report, which was based on a survey of more than 2,300 game industry workers. Of those, 36 percent said they were using gen AI tools as part of their job. Most of those using such tools were doing so for research and brainstorming (81 percent) but also for tasks like prototyping (35 percent). However, 52 percent of respondents said they thought gen AI was bad for the industry. That figure was up from 30 percent in the 2025 edition of the survey and 18 percent in 2024. Only seven percent said it was having a positive impact.

Elsewhere at Unreal Fest, it emerged that Epic is merging Unreal Engine 5 and UEFN into a single platform in UE6. One other thing that the company is testing is the ability to pull Fortnite skins into other UE6 games, and to let developers move their skins in the other direction. The company aims to release UE6 in early access in late 2027, with a full release lined up for around 12-18 months later.

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Epic had some news to share about collaborations as well. Those creating Fortnite experiences using UEFN will soon be able to make games based on The Simpsons, just as they can currently do with Star Wars IP. The company also revealed that more than 30 gaming collaborations are lined up for Fortnite this year, including Sonic Racing: CrossWorlds, Vampire Survivors, Control Resonant and Phantom Blade Zero.

However, Vampire Survivors developer Poncle appears to have concerns about Epic’s embrace of gen AI. “Following today’s news about gen AI usage by Epic to create all sort [sic] of game assets, including Fortnite characters, we’re currently ‘reviewing’ our collaboration with Fortnite,” Poncle stated on Reddit. “We’ll let you know if anything moves forward.”

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Long Live The Manual – Subaru Promises Three Stick Shift Models For 2027

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Despite Subaru’s mainstream reputation as a purveyor of safe, all-weather-friendly crossover SUVs for families, outdoorsy types, and dog lovers, the brand hasn’t forgotten its enthusiast DNA: The rally-bred Subaru WRX is alive and well, while the highly enjoyable Subaru BRZ continues to be one of the most engaging sports car options on the new car market. Even in a market where affordable fun cars have become exceedingly rare, Subaru plainly hasn’t left the driving enthusiast behind.

Of course, it’s not just the BRZ’s rear-drive dynamics or the WRX’s punchy turbocharged engine that make these cars enthusiast favorites. It’s the fact that both cars still come with six-speed manual transmissions as standard. They’re part of a rare breed, too, with other drivers’ favorites like the iconic Volkswagen GTI having dropped manual transmissions altogether. 

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Now, there’s some good news for Subaru fans who may have been worried about that brand following a similar path. As reported by CarScoops, Subaru has confirmed that not only is it committed to the manual gearbox, but it is also introducing a new manual-equipped model to its lineup — though details about that one remain scarce at this point.

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Upgraded BRZ and WRX manual versions

During the announcement, which took place at the 2026 Fuji 24 Hour race in Japan, Subaru showed an image of three different cars covered in sheets, all of which will hit the Japanese market by 2027. Two are pretty easy to identify based on their shapes: One is clearly a new version of the current Subaru BRZ, while the other very much looks like the current WRX. 

The current-generation WRX has always been available with a manual in the American market, but the Japanese-market WRX only got a manual in 2026 — and, even then, in extremely limited numbers. This new version of the WRX that Subaru is teasing will take things even further, as its transmission won’t be the TY75 six-speed currently used in the WRX, but the beefier, STI-spec TY85 transmission. Subaru didn’t give many other details about this upgraded WRX, but the inclusion of the stronger transmission could make it the closest thing yet to a proper, next-generation WRX STI. This is something fans have been asking for since the old WRX STI was discontinued in 2022.

As for the BRZ, that will be the latest factory STI-tuned version of the car. It will likely sport the same naturally aspirated engine but with additional upgrades to make it lighter and more track-focused — with, of course, the familiar six-speed manual transmission.

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A new manual Subaru hatchback is coming (to Japan at least)

The most noteworthy of the three cars that Subaru teased, however, has to be the one simply labeled “5-door Hatchback”. The current WRX and BRZ have always been offered with manuals, but this one represents an entirely new addition to Subaru’s stick shift lineup. 

Details are thin, but the shape of the car looks a lot like an Impreza hatchback and the Performance-B STI Concept from the 2025 Japan Mobility Show. However, rather than a high-performance STI hatchback, Subaru has hinted that this car will be more of an affordable entry into manual transmission motoring. Perhaps the base version will come first, with a more powerful, production version of the Performance-B Concept to follow? Either way, the car should be a welcome addition to the Subaru lineup.

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What remains to be seen, though, is which, if any, of these upcoming manual Subarus will make it to North America. Subaru has raised the possibility of offering a new, manual SUV for the American market, though that would likely represent a completely different, more rugged flavor of manual motoring than the cars teased here. No matter the form they take, though, one thing’s for sure: the more manuals on the market, the better.



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Estonia intends to recognize AI agents with digital IDs

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AI + ML

I am not a number! I am a free agent (that just happens to have a number)

Estonia plans to allow AI agents to have their own digital identities so they can act on behalf of people in a way that can be verified and audited.

The initiative, backed by the country’s Eesti.ai advisory board, calls for the development of ID codes that AI agents can use to take actions, subject to some unspecified authorization and task delegation process.

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Academics and corporate technical folk have already made related proposals in recognition of the absence of agentic technical infrastructure. Last month, researchers under the flag of OWASP proposed the Agent Name Service for agent discovery and interoperability. DNS for AI Discovery is another such project.

But these have more to do with platform plumbing while Estonia, known for its embrace of technology, is more focused on permission and punishment. Establishing digital identities for AI agents and authorizing limited powers will help avoid scenarios where individuals are required to delegate broad authority to an agent at the expense of their rights, the government says.

“In the future, AI will increasingly carry out digital tasks on our behalf, compiling reports, preparing declarations or interacting with information systems,” said Prime Minister Kristen Michal in a statement. “To that end, it must be clear who is acting on whose behalf with what rights, and who is ultimately responsible.”

By taking this step, Estonia casts itself as “first country to create digital identities for AI agents.” 

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Two weeks ago, Argentina’s President Javier Milei endorsed a similar idea, legislation to allow “non-human corporations,” managed by software, with limited liability. 

“Limited liability is not a luxury for such entities; it is a precondition for their existence,” Milei wrote in a Financial Times op-ed.

Several decades ago, IBM took a similar line on liability but reached the opposite conclusion about automated decision making: “A computer can never be held accountable, therefore a computer must never make a management decision.” 

Despite the citation of that passage from IBM’s 1979 Training Manual in a 2025 blog post, Big Blue’s designated author Doug Bonderud sounds less certain about the impermissibility of AI action these days.

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“Should AI be used for management decisions?” he mused. “Maybe. Will it be used to make some of these decisions? Almost certainly.”

While governments work on legal changes that will allow AI agents to operate, private sector companies are already taking a stance, at least with respect to external AI agent usage by customers.

Target Corporation earlier this year revised its Terms & Conditions with a section titled Agentic Commerce and Delegated Access. It states, “Purchases and other actions taken by an Agentic Commerce Agent that you have authorized are considered transactions authorized by you.”

American Express meanwhile has taken the opposite tack by assuming liability for errant agentic commerce. “In the future, if a Card Member authorizes an AI agent to make a purchase and that agent sends American Express the customer’s authenticated purchase intent, American Express will protect eligible customers from charges related to AI agent error,” the company said in April when it introduced its agentic commerce developer kit.

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In a pre-print paper last year titled “AI Agents and the Law,” Georgia Institute of Technology professors Mark Riedl and Deven Desai observe that once AI agents have the ability to act in a way that changes the state of the world – e-commerce transactions as opposed to output that requires human interaction for effect – concerns about harm become more pressing.

They note that while the law is well equipped to deal with conflicts arising from human agents, it’s not well-suited to the possibilities of software agents.

“Put simply, although computer science and law have similar notions of agents, a software agent is not the same as a human agent,” they write “For example, agency law disciplines agents by imposing legal liabilities on agents when they misbehave. Human agents can face financial and even criminal penalties; that is not so for software agents.”

To date, AI companies have done their best to limit liability for AI harms. But they’ve not been entirely successful: A Canadian court held Air Canada liable for bad chatbot advice, and a German court held Google liable for inaccurate AI Overview content.

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It may be a while before the rules for AI agents get hammered out and harmonized to whatever extent is possible. But in the interim we’ll at least have digital identifiers to call out bad agents by name. ®

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Internet Age-Gates Are A Growing Global Threat

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from the global-surveillance dept

The internet is an essential resource for young people and adults to access information, explore community, and find themselves—both inside countries and across continents. Yet governments around the world continue to introduce and implement legislation requiring all online users to verify their ages before accessing the digital space. In some cases, politicians are going further, putting forth proposals to ban social media for younger users.  

In late 2025, Australia’s government rolled out the first complete ban on users under 16 from having social media accounts. In this sweeping regime, platforms are required to introduce age assurance tools to block under-16s, demonstrate that they have taken “reasonable steps” to deactivate accounts used by under-16s, and prevent any new accounts being created, or face fines of up to 49.5 million Australian dollars ($32 million USD). The 10 banned platforms—Instagram, Facebook, Threads, Snapchat, YouTube, TikTok, Kick, Reddit, Twitch, and X—have each said they’ll comply with the legislation, which led to young people losing access to their accounts overnight. Reddit is currently challenging the law in Australian courts on constitutional grounds. Recent research notes how the ban is preventing teenagers from accessing news in the country. 

In the United Kingdomrules took effect in mid-2025 under the Online Safety Act that require all online services available in the country to assess whether they host content considered harmful to children; if so, these services must introduce age checks to prevent children from accessing such content. Online services are also required to change their algorithms and moderation systems to ensure that content defined as harmful, like violent imagery, is not shown to young people. 

This approach is reckless, short-sighted, and we’ve already seen it introduce more harm to the young people that it is trying to protect. The UK’s scramble to find an effective age verification method shows us that there isn’t one, and we’ve spent years urging UK politicians to abandon any measures that require platforms to collect data or remove privacy protections around users’ identities. 

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Earlier this year, Indonesia’s Communications and Digital Affairs Minister, Meutya Hafid, announced that users under 16 would have their accounts on “high risk” platforms deactivated from 28 March. The platforms subject to this ban are YouTube, TikTok, Facebook, Instagram, Threads, X, Bigo Live, and Roblox; with Hafid noting how this policy would make Indonesia “the first non-Western country to delay children’s access to digital spaces according to age.”

Similarly, the Malaysian government has recently pushed forward with plans to ban users under 16 from having accounts on social media platforms with at least 8 million users in Malaysia, including Facebook, Instagram, TikTok, and YouTube. Users under the age of 16 are being told to download or transfer their data from these platforms in one month before the restrictions are applied. Platforms failing to comply with the ban may face penalties of up to $2.5 million USD.

In Latin America, Brazil approved a new law in 2025 establishing that providers of information technology products and services directed to children and teenagers, or likely to be accessed by them, must conduct age checks when their products and services offer risks to underage users. Regulation requires age assurance for products and services that are not allowed for children and adolescents in accordance with Brazilian legislation. App stores and operating systems are required to provide age signals for other providers. 

While the law is already in force, full compliance with its obligations is expected for early 2027, after the approval of further regulations and a transition period, and the authority responsible for enforcing the law is the Brazilian National Data Protection Agency. The list of concerns regarding the implementation of the law include: the wide scope of products and services that may fall within age-check obligations, how these obligations can affect non-proprietary operating systems and free software projects, and how effective the law’s crucial data protection safeguards will be in a context of likely widespread age checks for accessing content online.

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Similarly, the European Union has taken large steps towards mandatory age verification that could undermine privacy, expression, and participation rights for everyone. Politicians are promoting an EU-wide approach to age verification through its age verification “app,” which will be fully interoperable with the Digital Identity Wallet. While this mini-app has been announced as technically ready to be rolled out “for citizens to use,” it comes with its own realm of potential privacy and security concerns, such as long-term identifiers (which could result in tracking) and over-exposure of personal information. 

The European Commission also supports age verification in various legislative initiatives, from proposals that would allow or mandate companies to scan our communication (“Chat Control”) to non-binding guidelines of existing laws, such as the Digital Services Act. The EU Parliament, too, has proposed an EU digital minimum age of 16 for access to social media, a move that aligns with EU Commission’s president Ursula von der Leyen’s recent public support for measures inspired by Australia’s model. To all these initiatives EFF has provided one consistent response: mandatory age verification measures are not the right way to protect young people. 

These proposals restrict the fundamental rights of young people to speak to each other and to access information. They also force all internet users, not just those under a certain age, to upload private data—like a face scan or passport—in order to access a website or service. In considering the vast scope of privacy issues pertaining to the collection, storage, and sharing of this personal information, the problems of age verification in restricting free speech are compounded by these reckless and harmful approaches to verification. 

The problem of censorship and surveillance goes far beyond the borders of the internet. EFF continues to explore support for legislative and litigation challenges that recognize how these laws harm everyone’s rights to privacy, free expression and due process.

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Republished from the EFF’s Deeplinks blog.

Filed Under: age verification, australia, brazil, eu, indonesia, malaysia, uk

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Building And Testing A DIY Robot Actuator

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[Brandon Lai] is hoping to build a humanoid robot. To that end, he’s going to need some actuators, and decided to design his own. His second pass at this turned out pretty well, with a few snags found along the way.

Target specs were a actuator that could run at 40 to 60 rpm while delivering 20 Nm of torque for up to an hour continuously. The design was inspired by an MIT research paper, with [Brandon] making a few mods to suit his use case. Where the MIT design uses an inbuilt planetary gearbox, this build substitutes a cycloidal gearbox with a hope it will provide better torque capacity with less backlash. The design is based around a hand-wound stator made with an off-the-shelf core, while using custom CNC parts and 3D printed components for the motor housing itself.

Testing revealed some limitations. Running off a benchtop power supply with limited current, the motor was only able to achieve 7 Nm of torque, though a better PSU would probably improve this. [Brandon] also noted excessive backlash in the cycloidal gearbox, due to poor tolerances, and the $400 construction cost came in well over budget. Still, [Brandon] hopes to tackle many of these problems in a future revision. CAD files are available online if you’d like to dig deeper into the design.

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We’ve featured plenty of great actuator builds over the years. Video after the break.

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Tim Cook says Apple price hikes are unavoidable as AI drives memory costs higher

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The rising cost of RAM and storage has become a growing problem for the tech industry. Apple has largely kept those increases from affecting customers, but according to a recent Wall Street Journal report, that may be about to change.

Speaking to the publication, Apple CEO Tim Cook said price increases are now “unavoidable” as the cost of DRAM memory and NAND storage continues to climb. The surge is being driven largely by the AI boom, as cloud providers and AI companies compete for the same chips used in consumer devices. Apple has largely shielded customers from those increases so far, but Cook indicated that strategy has reached its limits.

Apple held the line longer than most rivals

Apple’s ability to avoid major price hikes has not happened by accident. The company entered 2026 with inventory secured before memory prices accelerated and used its scale to negotiate supply agreements that many competitors could not match. Earlier this year, Apple also relied on product configuration changes, such as removing lower-capacity options from some Macs, instead of directly raising sticker prices.

The challenge is becoming harder as Apple prepares a new generation of AI-focused products. Following WWDC, the company is already testing its next-generation Siri experience and broader Apple Intelligence upgrades. Those features place greater demands on memory, which helps explain why some of Apple’s most advanced Siri capabilities are currently limited to devices with higher RAM configurations.

Apple is also expected to launch new Macs and its long-rumored foldable iPhone later this year, both of which could require larger memory allocations to support increasingly capable on-device AI features. Reports have already suggested that the iPhone 18 Pro could start at around $1,399 this fall, a $300 increase over its predecessor.

AI is forcing Apple’s hand

Cook told the Wall Street Journal that Apple is willing to use its financial resources to help secure memory supply, but he ruled out building Apple-owned memory or storage manufacturing facilities. “We can’t do everything. We know what we’re good at,” Cook said. Despite Apple’s influence over suppliers, that leaves the company exposed to the same market forces affecting the rest of the industry.

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With memory suppliers increasingly prioritizing AI infrastructure customers and analysts warning that shortages could persist into 2027, Apple’s long streak of absorbing those costs may finally be coming to an end.

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China pitches free AI for the developing world as the G7 debates who gets access to American models

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TL;DR

China wants a global AI cooperation org and offers cheap/free models. The G7 is discussing “trusted partner” access to US AI. Two systems are forming.

China’s top diplomat Wang Yi announced on Wednesday that Beijing is “accelerating the establishment of a global AI cooperation organization” and invited all countries to join. The comments came as the G7 summit in France wrapped up with discussions about giving “trusted partners” access to leading US AI models, according to Reuters. Two competing visions of AI governance are now diverging in public.

Wang was speaking at the release of China’s global governance whitepaper, which criticised trade wars and emphasised support for the Global South. Vice chair Zhao Haibing of China’s top economic agency pushed back on “closed, exclusive and monopolistic approaches to tech development.” The language was aimed directly at Washington.

The timing is deliberate. The US Commerce Department ordered Anthropic to shut down Fable 5 and Mythos 5 last week, cutting off every foreign user. Anthropic and Google DeepMind used the G7 to call for a US-led AI coalition that would set international rules. Canada agreed. China was not invited.

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The contrast in approaches is stark. US AI models are subscription-only and increasingly subject to export controls. China’s efforts have focused on cheap or free models that can be downloaded in their entirety. DeepSeek, Qwen, and other Chinese open-weight models are available to anyone with an internet connection. The Global South, which cannot afford enterprise AI subscriptions and was not consulted on the G7’s “trusted partner” framework, has a clear choice between the two.

China is routing its AI diplomacy through existing multilateral bodies. Wang pointed to cooperation through BRICs and the Shanghai Cooperation Organisation. Zhao cited China’s “AI Capacity Building for All” initiative, support for the UN in leading global AI governance, and programmes to help developing countries with technology and talent.

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The US and China said last month they would work on AI guardrails together, but few details have emerged. President Xi Jinping proposed a “Global Governance Initiative” at the SCO last summer. Premier Li Qiang announced the global AI cooperation organisation at a Shanghai conference in July 2025, just days after the Trump administration released its own AI action plan supporting US tech development overseas.

The structural split is now visible. The US is building an alliance of wealthy democracies with controlled access to its most powerful models. China is building data exchanges, exporting governance via the Digital Silk Road, and treating AI distribution as a geopolitical tool. For the 6 billion people who live outside the G7, the question is not which system is better. It is which system shows up first.

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Microsoft Working To Patch ‘RoguePlanet’ Zero-Day

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wiredmikey shares a report from SecurityWeek: Microsoft on Wednesday published an advisory acknowledging the public disclosure of a vulnerability in Defender that could lead to privilege escalation. The security defect, tracked as CVE-2026-50656 (CVSS score of 7.8), was dropped last week by security researcher Nightmare Eclipse (also known as Chaotic Eclipse). “We are working to provide a high-quality security update that addresses this vulnerability. We will provide information in this CVE when the update is available,” Microsoft adds.

RoguePlanet, Nightmare Eclipse explained last week, targets a race condition in Microsoft Defender and allows attackers to gain System privileges. The researcher released a proof-of-concept (PoC) exploit that demonstrates local privilege escalation (LPE) on Windows 11 and Windows 10 systems with the June 2026 patches installed. […] On Wednesday, Nightmare Eclipse pointed out that the PoC works regardless of whether Defender’s real-time protection is enabled or disabled. It may even work in passive mode, the researcher said.

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Tesco moving 40,000 server workloads off VMware amid Broadcom’s “abusive conduct”

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Tesco is also dealing with migration challenges related to data security because its new, unnamed virtualization software is incompatible with the Veeam and Zerto products it uses.

“Manifestly unfair and excessive” price hike

Tesco initially requested at least 100 million pounds (about $133.6 million) in damages each from Broadcom, VMware, and reseller Computacenter, plus interest.

In its recent filings, Tesco said it turned down at least four offers from Broadcom to continue using VMware and Broadcom’s mainframe tech. One offer charged $23.5 million (about 17.6 million pounds) for VMware Cloud Foundation 9.0 and mainframe software and support services for a year, The Register reported. Tesco said that was “around 175 percent” more expensive than what it believes it should have had to pay for VMware and a 350 percent price hike for the mainframe offerings. The prices were “manifestly unfair and excessive,” one of Tesco’s filings said, according to The Register.

In an amended defense, Broadcom denied that the price hike was unfair, The Register reported. Additionally, Broadcom argued that it shouldn’t have to pay damages in relation to Tesco struggling to find VMware and Broadcom alternatives before Tesco’s support expired, as the retail firm has since found replacement products.

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The case is expected to go to court between November 1, 2027, and February 25, 2028, The Register reported. Afterward, it could go to trial.

Although the companies will continue their dispute in UK courts, the disagreement mirrors frustrations that VMware customers and partners around the world have expressed since Broadcom bought VMware. With users often being heavily dependent on VMware products, many have delayed or avoided migration or are only moving some workloads, due to complications around cost, time, support, and compatibility.

Still, virtualization rivals, like Hewlett Packard Enterprise and Nutanix, have been making aggressive pushes to attract disgruntled VMware users.

Simultaneously, Broadcom has stuck to its VMware strategy and has reported financial success, especially among its target of large enterprises. It has also dealt with other public legal disputes with large customers, including AT&T, with which it reached an undisclosed settlement, and Siemens, which Broadcom accused of software pirating in an ongoing case in the US District Court for the District of Delaware.

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2026 Frikkin Lasers Contest: Steampunk, 360 O-Scope Does It With Tubes

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Audiophiles all know everything sounds better fed through vacuum tubes, but did you know visualizers look better with them, too? That’s what we’re forced to conclude looking at the Tachyscope Laser, a 360-degree oscilloscope display that is [Daniel Ross]’s entry into the ongoing Frikkin Lasers contest.

The diagram makes it look easier than building it probably was.

The laser is a good old-fashioned helium–neon tube — something we see less and less of in this era of solid state lasers — and the wavelength gives the waveform display a retro charm. The actual display is unique in our experience, with the beam shining up through a hollow shaft to bounce off a galvanometer mirror on a spinning platform. Galvo sweeps the laser across a translucent target, which creates the waveform by persistence of vision as it spins at 100 RPM or so.

Does the fact that the audio signal feeds through a tube amp to drive the single galvanometer actually improve the visuals? Only in the sense that those tubes make the steampunk-style enclosure look really, really cool, as does the exposed laser tube. That all of the steampunk elements obviously have a point to them rather than just being a another “glue some gears on it” project is icing on the laser-flavored cake.

The contest runs until July 23rd, so there’s lots of time to get laserin’ — and remember that there are categories for DIY lasers and anything that isn’t a display, just in case you think this project puts the bar too high for a light show. We’ve actually featured one of [Daniel]’s tachyscope waveform visualizers before, but that one, madly enough, spun an actual CRT.

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Smartphone Market To Shrink 15% This Year Due To Memory Crisis

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CCS Insight expects global smartphone shipments to fall 15% this year as AI-driven demand pushes memory manufacturers toward higher-margin server chips. “[S]ome entry-level devices have already seen their sticker prices go up by more than 50 percent since last year,” reports The Register. From the report: The firm found that the primary smartphone market (meaning new devices) contracted 4.4 percent in the first quarter of this year, despite sales channels front-loading (meaning stockpiling) product inventory, as device prices begin to rise sharply. As CCS notes, this casts an ominous shadow on the outlook for the rest of the year, and it seems things have worsened since The Register first started reporting on the smartphone memory woes.

Back in January, the forecast was for handset price rises of 6-8 percent, while the most pessimistic outlook was that the global market might contract as much as 5.2 percent. By February, analysts were expecting to see a decline in shipments of around 8 percent across the global market, and for prices to increase by about 14 percent.

The root cause of all this is the AI craze, which has seen huge demand for high-performance GPU-filled servers to process it all. Chipmakers have moved to capitalize on this by prioritizing production of high-margin memory components for those servers, rather than making the plain old DRAM and NAND needed for PCs and phones. “The memory chip crisis shows no sign of slowing down in the near future, ramping up the pressure on manufacturers and consumers. Memory components now account for more than 30 percent of a manufacturer’s bill of materials in some smartphones.” said CCS research analyst Ben Hatton. “The full impact has yet to be felt in many regions, but it’s clear that device prices will accelerate over the rest of the year.”

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