Your intuition is correct that the steam machine will go up in price but I think It'll still have an edge over building your own PC for a couple of reasons:

1. Valve has economies of scale and can make contracts directly with Dram manufacturers/distributers

2. The Steam Machine is just already cheaper to make than a pre-built because it has a custom APU (rather than a standalone graphics card). Not to mention running Linux means not having to pay for a windows licence

3. The Steam Machine only has 16 GB of RAM. Most everyone I know building gaming PCs with DDR5 are using 32 GB

The steam machine is not a cutting edge device, but its lower end capabilities may become normalised if building a new PC becomes cost prohibitive. It may force the whole gaming industry to take a step back for a few years. And I mean, the steam Machine can play Cyberpunk 2077 at 4k 60 fps with FSR upscaling so its got enough performance for lots of consumers

Same as consoles. Sell at a loss to increase game sales and earn more on the backend.