Memory chip crunch set to push up smartphone, PC prices

It estimates a 130% surge in combined DRAM (Dynamic Random Access Memory) and solid-state drive (SSD) prices by the end of 2026. This will increase PC and smartphone prices. DRAM is a type of computer memory used in a variety of consumer and industrial electronics.

Bengaluru: Soon, buying a smartphone or personal computer (PC) will burn a hole in your pocket due to memory chip shortage. Prices of smartphones and PCs could go up by at least 13 per cent and 17 per cent, respectively compared to the rates last year, according to business and technology insights company Gartner.

It estimates a 130 per cent surge in combined DRAM (Dynamic Random Access Memory) and solid-state drive (SSD) prices by the end of 2026. This will increase PC and smartphone prices. DRAM is a type of computer memory used in a variety of consumer and industrial electronics.

This memory chip shortage is due to the massive build-out of AI infrastructure. High Bandwidth Memory (HBM), which is a type of advanced DRAM, is being allocated to AI data centre uses.

Recently, US chipmaker Qualcomm, in its earnings call, acknowledged an industry-wide memory shortage. The company’s CEO Cristiano Amon, during the earnings call, said that in the coming quarters, the handset industry will be constrained by the availability and pricing of memory, particularly DRAM.

As memory suppliers redirect manufacturing capacity to HBM to meet AI data centre demand, the resulting industry-wide memory shortage and price increases are likely to define the overall scale of the handset industry through the fiscal year, he said.

Smartphones, PCs (volume-driven markets with thin margins), consumer electronics and IoT devices, automotive electronics (increasing memory content per vehicle) and some industrial and telecom equipment will be the most-affected segments, Ashok Chandak, president of the India Electronics and Semiconductor Association (IESA) told DH.

“Large hyperscale AI companies are relatively insulated due to long-term supply contracts. The pressure is more visible in mass-market electronics, which will see cost increases and potential specification adjustments,” he said.

IESA’s industry insights suggest that memory chip prices will go up by about 30–50 per cent in many segments over the last year, with higher spikes in some cases.

Smartphones/PCs will see 5–10 per cent increase and consumer electronics will witness up to 10–15 per cent rise depending on memory content.

“The impact varies by product category and contract cycles, but the broader trend is that memory is no longer a low-cost commodity input,” he said.

New global memory capacity takes two to three years to come online, and given the current AI infrastructure investments, tightness may continue through 2026 and into 2027, with gradual normalisation thereafter, Chandak added.

Last month, during Samsung Electronics’ earnings conference, Jason Shin, EVP of System LSI said rising memory chip prices have been weighing on mobile set makers driving up BOM (bill of materials) costs. “Based on our analysis of the smartphone market, while the mid- to low-tier segments are experiencing significant pressure on costs, in contrast, device makers in flagship and premium segments are expected to differentiate through on-device AI and camera performance. And as a result, we anticipate sustained demand for high-performance SoCs and sensors to continue,” he added.

IDC expects 2026 DRAM and NAND supply growth to be below historical norms at 16 per cent year-on-year and 17 per cent year-on-year, respectively.

“Memory modules, which used to cost less than $20 a year ago, could exceed $100 by year-end for top-tier models. The result is a structural shift. This is a reversal of everything we’ve come to expect from this industry. When something that used to get cheaper every year suddenly becomes a lot more expensive, the economics of building a smartphone fundamentally change,” Carl Pei, CEO, co-founder, Nothing Inc, said.

Asked when RAM and storage chipset prices could become stable, Nipun Marya, CEO, iQOO, told DH during the iQOO 15R launch on February 24 that it is anybody’s guess. “Nobody has a very clear idea. But, yes, the forecasts are that prices are still going to rise,” he said.