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Smartphone Prices on the Rise: Why Your Next Phone Might Cost More
If you’re hoping to buy a smartphone significantly cheaper in 2026 than you did a year or two ago, prepare for disappointment. Carl Pei, CEO of Nothing, confirms that memory—specifically RAM—has become the most expensive component in a phone, surpassing the processor and screen. Its prices are escalating so rapidly that the entire industry is bracing for a sustained increase in device costs, potentially lasting until 2027.
The AI Boom and Its Impact on Smartphone Memory
The artificial intelligence (AI) revolution is fundamentally reshaping the technology landscape, and one of its most profound effects is on memory demand. Data centers, which train and operate large language models (LLMs), have emerged as the largest customers for DRAM and NAND memory manufacturers.
AI Consumes Memory, Shifting Supply Away from Smartphones
Memory chips that once predominantly found their way into smartphones, laptops, and gaming consoles are now largely being diverted to the server farms of major tech companies. This shift has led to a constrained supply of memory for consumer electronics. Manufacturers are reallocating production capacity to where margins are higher: the AI infrastructure sector.
Market data reveals a dramatic surge in memory prices. Between 2025 and 2026, prices for mobile DRAM (LPDDR4 and LPDDR5) skyrocketed by 220–250 percent. The increase for DDR5 modules used in PCs was even steeper. Industry analysts, including IDC, are openly discussing an “unprecedented memory crisis” that could persist until 2027, simultaneously driving up production costs and potentially slowing the sales of smartphones and computers.
Carl Pei: “Memory is Now the Most Expensive Component in a Smartphone”
Carl Pei, the visionary founder and CEO of Nothing, has been vocal about this critical issue. Through a series of posts and interviews, he has consistently highlighted that memory is currently the fastest-appreciating component in a phone. He predicts it could become the single largest cost item in the Bill of Materials (BOM) even before the end of 2026. Pei notes that in some instances, the cost of RAM modules has already tripled, and the possibility of further price hikes is not being ruled out.
“Memory is now the most expensive component in a smartphone. It’s more expensive than the processor, more expensive than the display, and can account for more than 50% of the total hardware bill.”
— Carl Pei (@getpeid) June 12, 2026
According to Pei, the memory in a top-tier smartphone, which might have cost less than $20 a year prior, could exceed $100 by late 2026. This represents a five-fold increase over a remarkably short period. Such volatility disrupts the standard product development cycle, where manufacturers typically finalize specifications and BOM budgets months before a product launch. Today, they face a situation where a crucial component’s cost dramatically increases even while a project is still underway. This challenge further emphasizes the value proposition of devices like the Nothing Phone (4a), which aims to balance innovation with accessible pricing.
The Disappearance of Affordable Smartphones
The impact of rising memory costs is most acutely felt in the budget smartphone segment, where every dollar in the BOM carries significant weight. Analysts from Counterpoint and IDC estimate that the material cost for smartphones under $200 has increased by 20–30 percent since the onset of the memory crisis. In contrast, mid-range and high-end devices have seen cost increases of 10–15 percent.
Under such intense pricing pressure, brands are often unable to absorb these increases. Consequently, the most affordable smartphone models are either becoming more expensive, disappearing from product lineups, or being released with significantly weaker specifications. This trend is also influencing how companies approach new technologies and features, such as the potential for AI integration and its impact on app ecosystems.
Pei anticipates that some manufacturers will raise smartphone prices by approximately 30 percent. Others will attempt to protect their profit margins by reducing RAM and storage capacities, lowering camera quality, or omitting accessories from the box. This trend of gradually increasing prices for devices that were once positioned as “budget-friendly” is already evident. This can be seen not only in the anticipated new generations of Nothing models but also in the strategies of major established brands.
Is It Worth Waiting to Buy a Phone?
From a consumer perspective, the most rational strategy is to let go of the expectation of a return to old “promotional” prices. Instead, focus on finding models that offer the best possible value for money under current market conditions. For users with older devices, this also means it’s wise to extend the life of their current smartphone through battery replacements, software updates, and repairs. Upgrading to a new model in 2026 is likely to have a more noticeable impact on your wallet than it would have a few years ago.
This issue extends beyond smartphones, affecting laptops, gaming consoles, and mini PCs. Consumers planning to replace their hardware in 2026 should be prepared for higher prices and fewer attractive promotions.
Frequently Asked Questions (FAQ)
Smartphone prices are projected to rise primarily due to the soaring cost of memory (RAM), which has become the most expensive component in a phone. This surge is largely driven by the high demand for memory from AI data centers.
Industry analysts predict that the “unprecedented memory crisis” could last until at least 2027, continuously impacting production costs for consumer electronics.
Carl Pei suggests that “the best time to buy was yesterday.” If you need a new phone, consider purchasing sooner rather than later, focusing on value under current market conditions. For existing devices, prolonging their lifespan through maintenance is also a smart strategy.
No, the impact of expensive memory extends beyond smartphones to other consumer electronics such as laptops, gaming consoles, and mini PCs. Consumers should expect higher prices and fewer promotions across these categories.
Between 2025 and 2026, prices for mobile DRAM (LPDDR4 and LPDDR5) increased by an estimated 220–250 percent, making it a significant cost factor in smartphone manufacturing.
Source: Digital Trends
Opening photo: Nothing / press materials
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