Smartphone RAM costs overtake chipsets
Smartphone RAM costs now refer to the rapidly rising price of memory chips that has made RAM and storage the single most expensive part of many phones, overtaking processors and forcing brands to raise retail prices or cut features even on budget and mid-range devices. Nothing CEO Carl Pei has confirmed that in current designs, RAM and storage can account for more than half of a handset’s total hardware bill, a reversal of the long‑held assumption that chipsets define the cost ceiling. His public comments highlight that in the Nothing Phone (4a), memory costs doubled between design sign‑off and launch, then doubled again after release, turning a standard component into the main source of margin pressure. As brands pay more for each extra gigabyte, they must choose between charging higher prices or holding back on capacity, both of which affect buyers directly.
From design table to store shelf: costs that won’t sit still
The Nothing Phone (4a) shows how rising component prices undermine traditional product planning cycles. By the time the device reached warehouses, the memory inside it cost twice as much as when the design was approved, forcing an immediate rethink of pricing. According to Carl Pei, memory prices in some categories have now surged by roughly 300 percent, and for certain models RAM and storage together represent more than half of the bill of materials. Suppliers, facing stretched capacity, are giving handset makers limited quotas instead of open orders, and those limited shipments often come with premium pricing. As a result, Nothing increased prices for both the Phone (4a) and Phone (4a) Pro shortly after launch, and other brands are facing the same dilemma: absorb the hit, shrink specs, or pass the cost on to consumers with clear phone price increases.
AI-driven memory chip shortage and $100 price jumps
Behind these rising component prices is a memory chip shortage reshaped by artificial intelligence. Cloud providers building AI data centres are signing multi‑year deals with DRAM manufacturers, locking in production that once served smartphones. Jensen Huang of Nvidia has said demand will exceed supply for years, and that imbalance is filtering down the chain. DRAM prices have climbed sharply, adding 10–30 percent or more to smartphone build costs depending on configuration, and Pei notes that many new handsets have launched about USD 100 (approx. RM460) higher than their predecessors. Research firm Techarc found average smartphone prices in India rose 7.9 percent in the first five months of 2026, with sub‑USD‑120 devices up 17.6 percent. These figures show how AI’s hunger for memory is making even entry‑level phones more expensive, while big brands with pricing power can pass cost hikes on more easily.
How higher RAM costs reshape the smartphone market
As smartphone RAM costs climb, they are reshaping who can compete. Higher memory prices hit budget and mid‑range devices hardest, because a few extra dollars of component cost can wipe out margins. Chip suppliers like MediaTek and Qualcomm are seeing shipment volumes stagnate as brands hesitate to commit to high‑spec mid‑tier phones. Meanwhile, companies with strong flagship lines, such as Apple and Samsung, gain share not because their devices are dramatically better, but because they can price higher models to absorb component inflation. Trade groups for automakers, telecom vendors, and medical device manufacturers have already warned that AI data centres are consuming memory chips at a scale that raises costs across their sectors too. In this environment, smaller smartphone challengers and regional brands face pressure to cut RAM and storage or move up‑market, reducing choice for consumers at the lower end.
Why policy moves may not cut your next phone bill
Governments are trying to address the underlying supply constraints, but relief for phone buyers is distant. The European Commission’s Chips Act 2.0 proposal would give officials emergency powers to override chip supply contracts, direct manufacturers toward priority orders, and speed up permits for new fabrication plants. The Commission admits that slower approvals add about three percent to the cost of new facilities, and earlier targets to raise the region’s share of global production to 20 percent by 2030 have already slipped, with major projects cancelled and the share still below 10 percent. The new package will take years to influence real supply. For now, smartphone makers remain at the back of the queue behind AI infrastructure clients, and Pei’s warning stands: buyers should not expect previous levels of discounting while memory remains the costliest component inside the devices in their pockets.
