AI-Driven Memory Shortage Pushes Smartphone Prices Up 25% in 2026

Smartphone prices are rising across global markets, and the cause is not higher labor costs or weaker demand. Instead, the pressure is driven by a shortage of memory chips, which is being exacerbated by AI data centers. As cloud companies buy more chips for servers, fewer parts are left for phones and PCs. As a result, device makers are facing higher costs and are passing part of that burden to buyers.

Research firms report that memory now accounts for more than 20% of the total cost of building a smartphone. That is up from about 10% to 15% in past years. At the same time, phone makers have limited room to cut memory use. New AI features require more power and more storage, which keeps memory needs high even as costs rise.

According to Omdia, mobile DRAM prices have risen more than 70% since early 2025. NAND flash prices have almost doubled in the same period. As a result of these increases, smartphone prices have already risen by 10% to 25% in several regions. Meanwhile, lower-priced devices are feeling the most strain, since memory is a larger share of their total cost. Research firm Counterpoint now expects global smartphone shipments to fall by about 2.1% in 2026, reversing earlier forecasts.

^{Galaxy S26. Higher memory costs could push flagship prices toward $900 or more in 2026.}

Why Memory Prices Are Rising

The main driver of the shortage is the rapid growth of AI data centers. Companies building AI systems are buying large amounts of high-bandwidth memory, which is used in advanced servers. That memory is more profitable than standard chips used in phones and laptops. As a result, chipmakers are shifting factory space toward server products.

Samsung Electronics (SSNLF) and SK Hynix (HK:7709) have both said their memory supply for 2026 is already sold out. TrendForce reports that contract prices for 16Gb DDR5 chips jumped nearly 300% in three months, rising from about $6.84 in September to $27.20 in December 2025. This sharp rise shows how tight supply has become.

The impact is spreading beyond phones. Dell Technologies (DELL) and Lenovo Group (LNVGY) plan to reduce memory in new mid-range laptops starting in 2026. Some models will ship with 8GB of RAM instead of 16GB. Smaller PC builders are taking more drastic steps, with some desktops now shipping without memory at all.

In the smartphone market, entry-level models are expected to fall to 4GB of RAM. Mid-tier phones may be limited to 6GB or 8GB instead of the 12GB seen in recent models. IDC expects the shortage to last into 2027, while some firms say it could stretch to 2028.

Impact on Major Phone Makers

The timing of the shortage is difficult for upcoming phone launches. Samsung is expected to raise prices on its Galaxy S26 lineup due to higher component costs. Apple (AAPL) is also likely to adjust pricing for the next iPhone generation later this year. Chinese brands such as Xiaomi (XIACF) and Vivo are expected to follow similar moves as memory costs remain high.

The price pressure is already visible. The cost of a 12GB LPDDR5X chip used in Apple’s iPhone 17 Pro has more than doubled this year. At the start of 2025, those chips cost about $25 to $29. Today, they are closer to $70. Apple’s supply deals with Samsung and SK Hynix expire in January 2026, which could push costs even higher.

Samsung has told customers to expect memory price hikes of 30% to 60% in late 2025. IDC forecasts that average PC prices could rise by up to 8% in 2026. Smartphone prices are also expected to reach a new high, averaging $465 per device.

Winners and losers in the Cycle

For device makers, the situation creates a tough trade-off. If companies cut memory, they risk weaker performance and lower demand. If they raise prices, they risk slowing sales. In many cases, firms are choosing a mix of both options.

Meanwhile, memory suppliers are benefiting. Samsung, SK Hynix, and Micron Technology (MU) are seeing strong demand from AI platforms built by Nvidia (NVDA), Microsoft (MSFT), and Alphabet (GOOGL). That demand has created a pricing floor that supports higher margins for chipmakers.

Looking ahead, analysts do not expect quick relief. AI data center spending remains strong, and chipmakers continue to focus on higher-margin server products. As AI features become standard on phones and PCs, memory demand is likely to stay high even as overall device sales slow.

For investors, the key point is that this memory cycle is being shaped by AI spending rather than consumer demand. That shift is moving pricing power upstream, favoring chip suppliers over device brands. While phone and PC makers adjust through pricing and design changes, memory producers are positioned to capture the bulk of the gains from this trend.

We used TipRanks’ Comparison Tool to align all the stocks appearing in the piece. This tool is very useful for an in-depth look at each stock and the memory chip industry as a whole.