For years, smartphone makers have treated memory as the boring part of the bill of materials — essential, but cheap enough to hide in the background. That era is over.
A global RAM shortage, driven largely by the AI boom, is pushing up the cost of phones, laptops and a growing list of electronics. The pressure is already showing up in retail prices, and companies are warning that the next round of devices may cost even more.
Nothing CEO Carl Pei put it bluntly this week: memory costs for the company’s Phone (4a) doubled between the time it was designed and the time it launched, then doubled again after that. His warning was even sharper than the numbers. Phones are getting more expensive, and the discounts people expect around sale season may not look the same this year. That lines up with broader concerns across the industry, where memory can now make up more than half the hardware cost of a handset.
AI is eating the supply
The immediate culprit is the AI data-center buildout. Chipmakers are prioritizing high-bandwidth memory, or HBM, for servers powering AI systems, because that’s where the money is. The result is a squeeze on conventional DRAM, the memory used in smartphones and PCs.
That’s a problem because manufacturing capacity isn’t endless. Every wafer pushed toward AI-grade memory is one fewer wafer for consumer devices. As suppliers chase better margins, budget phones are feeling the pain first. According to Counterpoint Research, memory could account for roughly 43% of the bill of materials for smartphones under Rs 20,000, with overall BOM costs climbing as much as 25% in 2026. Gartner is even more bearish, forecasting smartphone prices to rise 13% and PC prices 17% by the end of next year.
The Indian market is already starting to absorb that shock. In one breakdown of device prices, lower-end phones moved from memory costing under 10% of the total hardware cost to more than 40% now. That kind of jump leaves manufacturers with a familiar but unpleasant choice: trim specifications, raise prices, or ship fewer devices.
Budget phones are the first to wobble
The lowest-priced phones are the most vulnerable because there’s very little fat to cut. Premium models can absorb some of the increase, but entry-level handsets often have to hit hard price ceilings. Once memory gets expensive enough, the whole product equation changes.
That’s why analysts expect brands to push out cheaper configurations, strip back non-essential features, and quietly pass costs to buyers. It’s also why upgrade cycles are stretching. People simply keep their phones longer when replacements get pricier.
Nothing’s warning isn’t happening in isolation. Samsung and Google are both expected to raise prices on upcoming phones as memory costs rise, and Samsung’s own lineup is already showing some uneven pressure in certain markets. Motorola, meanwhile, has reportedly been forced into sharp hikes on its Moto G range as the same crunch hits midrange hardware.
The pattern is showing up far beyond Android handsets. In the Philippines, a recent price survey found major jumps across brands, especially in 2026 models, with some devices adding thousands of pesos between generations. Apple has been better insulated so far, partly because it tends to lock in parts ahead of time, but even that advantage may only delay the pain.
This is no longer just a phone story
The bigger concern is that RAM prices affect more than smartphones. PCs, tablets, smart TVs, energy meters and even some medical and industrial devices depend on the same supply chains. When component costs climb across the board, the effect spreads fast.
India’s electronics industry is now bracing for price increases of 10% to 25% across a wide range of products, with memory, PCBs and display components all becoming more expensive. Deccan Chronicle reported that the pressure is likely to hit smartphones and other electronics-intensive products hardest, while more basic appliances such as washing machines and refrigerators should be less exposed.
For consumers, the shift is more than a pricing headache. It can change what kind of devices get built in the first place. If makers decide a cheaper phone is no longer profitable, they may simply stop making it. That’s where the shortage starts to look less like a temporary market hiccup and more like a digital access problem.
Dion Price, writing for IT Brief UK, framed it as a digital inclusion issue for a reason. If a capable smartphone drifts out of reach, people lose access to payments, education, communication and basic online services. In emerging markets, device affordability is not a luxury debate — it determines who gets online at all.
That’s why efforts such as the GSMA-backed push for a $40 4G phone matter, even if they now look harder to pull off. A cheap device with too little memory, weak storage and poor durability may be affordable on paper but useless in practice. The industry’s challenge is no longer just making phones cheaper. It has to make them financeable, durable and functional enough to matter.
Phones may stay expensive for a while
No one serious in the supply chain is calling this a short blip. Memory prices are expected to stay elevated well into 2027, and some forecasts stretch the disruption further. As AI infrastructure keeps expanding, demand for HBM and server memory continues to pull capacity away from consumer hardware.
That means the next wave of phones may arrive with less generous specs, fewer storage tiers and thinner promotional discounts. It also means buyers may start seeing more devices shipped with 8GB RAM as a base, a return to smaller storage options, and fewer high-capacity variants.
There’s a lot of product strategy shifting underneath the numbers. Manufacturers are already rethinking which models deserve priority, how many units to ship, and whether it’s worth chasing low-end volume when the margins are so tight. In some cases, the answer may be no.
So if you’ve been waiting for prices to settle before upgrading, the market’s message is pretty clear: don’t expect the old bargains to come back quickly. The new normal is looking a lot like a more expensive one.
