Cisco hikes prices to cover memory cost rises

Cisco has increased hardware pricing across its product lines to compensate for rising memory component costs, with CEO Chuck Robbins confirming the move during the company's Q2 2026 earnings call. The networking giant attributes the increases primarily to volatile DRAM and NAND flash pricing, which have surged approximately 40% year-over-year according to industry analysts. While networking appliances require less memory than servers, Robbins noted the hikes are necessary to maintain margins amid supply chain pressures.

Technical impact and customer response

Networking hardware typically utilizes DRAM for packet buffering and TCAM tables, with high-end switches containing 16-64GB versus servers needing 512GB+. This architectural difference means Cisco's increases average 7-12% versus 15-20% for server vendors. CFO Mark Patterson stated customers haven't altered purchasing behavior: "I haven't talked to any customers willing to delay strategic investments." Enterprise buyers reportedly acknowledge the market dynamics, with Cisco leveraging its scale to secure component supply.

Performance and market context

Component	Price Impact	Cisco Mitigation
DRAM	+38% YoY	Contract renegotiation
NAND	+42% YoY	Supply chain optimization
ASICs	+5% YoY	Pre-bought inventory

Cisco reported record quarterly revenue of $15.3 billion (up 10% YoY), fueled partly by $2.1 billion in hyperscaler orders. Robbins highlighted AI infrastructure demands driving campus network refreshes, noting legacy equipment lacks the throughput for AI workloads. The Catalyst 9000 series switches now support 25G/100G uplinks essential for AI data pipelines, though memory-intensive features like NetFlow require careful configuration to avoid performance hits.

Recommendations for builders

• Enterprise buyers: Lock in quotes before next price adjustment cycle (expected Q3 2026)
• Homelab users: Consider refurbished Catalyst 3650/3850 series (24-48 port) for 1G/10G labs - validate DIMM compatibility
• Network design: Prioritize switches with modular uplinks to avoid premature refresh cycles
• Power consideration: Newer models show 8-15% better power efficiency per gigabit despite higher component costs

Despite forecasting record annual revenue up to $61.7 billion, Cisco shares fell 7.5% in after-hours trading due to concerns about margin compression. The company plans further "targeted adjustments" as memory markets fluctuate, emphasizing optics and Silicon One processors as competitive advantages in hyperscale deployments.