Brace yourself! Smartphones could get more expensive
What's the story
The global memory chip market is on a steep rise, and the reason is artificial intelligence (AI). A recent report by Counterpoint Research has revealed that the memory market has entered a "Hyper Bull" phase, with prices skyrocketing faster than expected. This trend could lead to an increase in smartphone prices in the near future.
Market shift
AI's impact on memory chip demand
The surge in demand for memory chips, including DRAM and mobile memory like LPDDR, is largely due to the widespread use of AI tools and the development of larger servers. These tiny components are essential for quick data processing in smartphones, laptops, and servers. With this increased demand, suppliers now have more power than ever before in determining prices.
Future projections
Price predictions for memory chips
Counterpoint's tracker predicts a staggering 40-50% jump in memory prices in Q4 2025, followed by another similar rise in Q1 2026. A smaller increase of about 20% is expected in the second quarter of this year. The price of a server memory module, the 64GB RDIMM, has already jumped from $255 in Q3 2025 to $450 in Q4 and could hit $700 by March 2026.
Manufacturing costs
Rising memory costs impact smartphone manufacturing
The rising cost of memory chips is also affecting the manufacturing costs of smartphones. In 2020, memory accounted for about 8% of the total parts cost in an iPhone 12 Pro Max. By 2025, this figure had crossed 10% for an iPhone 17 Pro Max. For high-end phones with up to 24GB RAM and up to 1TB storage, memory now accounts for over 20% of the total parts cost.
Production changes
Suppliers shift focus to high-profit memory
In light of these developments, suppliers such as Samsung and SK hynix are moving their production away from older, cheaper memory technologies like LPDDR4 and eMMC. They're now focusing on DDR5 memory for servers due to its higher profit margins. This shift is making it harder to find cheaper memory parts, especially for older or budget devices.