How the AI chip shortage connects to your phone bill
The AI chip shortage is a global squeeze on memory components, driven by AI data centers buying huge amounts of DRAM and high‑bandwidth memory, that leaves fewer chips and less production capacity for smartphones, pushing up the cost of both RAM and storage and feeding directly into higher phone prices and fewer affordable models. The memory inside AI servers and the memory inside your phone are not identical, but chipmakers build them on the same production lines, so capacity is shared. As AI companies pay more per gigabyte, manufacturers divert factories toward high‑bandwidth memory for AI inference clusters. According to IDC, DRAM supply growth in 2026 is expected to fall below historical norms as wafer capacity is reallocated. That supply shift has already pushed mobile DRAM prices up sharply and turned the memory chip shortage into a phone affordability crisis for everyday buyers.
From AI data centers to a memory chip shortage
Hyperscale AI data centers are now the main force behind the memory chip shortage. They deploy servers filled with top‑tier DRAM and high‑bandwidth memory to run large models and cloud AI services, soaking up supply that once served consumer electronics. Chipmakers such as Samsung, SK Hynix and Micron are steering limited wafer capacity toward these premium AI parts because they earn more per gigabyte than from mobile DRAM. IDC expects DRAM supply growth in 2026 to fall well below its usual pace because of this reallocation. Counterpoint Research reports that mobile DRAM prices have risen close to 70% since early 2025, while NAND flash storage has nearly doubled in the same period. One clear outcome is that memory now accounts for more than 20% of the total cost to build a mid‑range smartphone, compared with roughly 10–15% before the current AI wave.
How much smartphone prices are rising and who pays most
The memory chip shortage has already turned into a broad smartphone price increase, though the impact differs by segment. Estimates suggest handset prices have climbed 6–25% in most regions as manufacturers pass on higher component costs. In budget phones under USD 200 (approx. RM920), memory now makes up 25–30% of the bill of materials, which leaves no room to absorb a 70% jump in DRAM costs. These low‑end devices face the steepest hikes, with projected retail increases of 20–30% and a high risk of production cuts. Mid‑range models between USD 200 (approx. RM920) and USD 500 (approx. RM2,300) see memory rise to 18–22% of total cost, translating to about 10–15% price growth. Flagships above USD 800 (approx. RM3,700) are less exposed, with memory at 12–15% of cost and price increases closer to 6–9%, because brands can cushion more of the shock with higher margins.
Budget and mid‑range phones face a phone affordability crisis
Because memory is a larger share of their costs, budget and mid‑range phones sit at the center of a phone affordability crisis. For entry‑level models, some brands are choosing to cut production instead of selling at a loss. Others keep headline prices flat but quietly reduce RAM and storage, so a device that once shipped with 6GB of RAM and 128GB of storage may drop to 3GB and 64GB at the same price. First to feel this are budget handsets used by millions of people in emerging markets, while value‑focused brands that rely on affordable phones face growing pressure. As one assessment warns, smartphone prices could rise by 15% or more in coming quarters if memory costs stay high. Over time, that does not only mean paying more; it also means fewer genuine budget options and delayed upgrades for users who depend on low‑cost devices.
What major brands are doing and how long this could last
Big smartphone makers are already reshaping their line‑ups around the AI chip shortage. Samsung raised prices on its latest Galaxy S‑series models and highlighted larger base storage, a move aligned with higher NAND flash costs. Apple has so far absorbed more of the impact, but its leadership has signalled that memory costs are starting to squeeze margins and could influence future iPhone pricing. Google is reported to be trimming RAM in some upcoming models, which may restrict access to its most advanced on‑device AI features. Meanwhile, PC manufacturers are warning of 15–20% price hikes as the memory crunch spreads across electronics. Industry voices caution that there may be “no relief until 2028,” suggesting that the AI‑driven memory imbalance, and the smartphone price increases that follow from it, could remain a reality for several more upgrade cycles.