Smartphone prices are set to increase as Apple plans to unveil its new lineup, signalling the impact of rising memory costs that have gripped the tech industry. Industry experts suggest this trend, described by some as a “100-year flood,” may persist for several years as memory demand continues to outstrip supply.
Memory scarcity escalates costs
The industry is experiencing significant memory shortages, leading to rising prices for various electronics, including smartphones and game consoles. This problem has been exacerbated by the increasing capabilities of AI technologies, which require substantial memory resources. Companies have been consistently discussing memory prices and shortages, with 473 business transcripts last quarter mentioning these terms, according to industry data.
AI’s role in the demand surge
Although some attribute the memory shortage to AI technologies, the problem predates ChatGPT’s rise and has been intensified by AI’s demand for dynamic random-access memory (DRAM) and high-bandwidth memory (HBM). AI-driven solutions consume significant volumes of these memory types, thus stretching manufacturing capacities. The high profitability of HBM drives memory makers to allocate more resources towards it, as companies like Nvidia and AMD continue to pay premium prices.
Manufacturing hurdles and timeline
Manufacturers such as Micron, Samsung, and SK Hynix are grappling with the limitations of current production levels. Increasing manufacturing capacity is a daunting task, requiring construction of new facilities that may take years. Micron’s new manufacturing complex in Syracuse, New York, exemplifies these challenges, with production not expected to commence meaningfully before 2030 despite accelerated timelines.
Price hikes affecting consumers
Consumers are already feeling the effects of this supply-demand imbalance. Counterpoint research indicates DRAM prices for smartphones have surged by 56% in the first quarter of 2026 compared to the previous quarter, with a further 83% increase in the second quarter. As companies like Apple face constraints, they are making strategic adjustments, such as releasing fewer models initially, focusing on high-end products like the upcoming iPhone 18 Pro and Pro Max.
As manufacturers work to accommodate AI’s burgeoning demand, some industry experts predict that the situation may finally stabilise beyond 2027. However, the potential for demand to decrease remains uncertain, with the possibility of a future shift as AI investments fluctuate. In the meantime, consumers are likely to witness continued price increases, albeit at a slower pace, as the industry seeks equilibrium.
Reporting based on coverage first published by theverge.com.