A major price shock is looming for smartphone buyers in 2025 as memory chip shortages tighten worldwide. Driven by historic demand from artificial intelligence companies and restricted supply from major chipmakers, the crisis is expected to push smartphone prices noticeably higher throughout next year.
Analysts warn that the cost escalation may reshape the global smartphone market, particularly for budget devices that depend heavily on low-cost memory components.
Memory Prices Climb at Record Pace
Counterpoint Research reports memory chip prices will rise 30% in Q4 2025, with an additional 20% increase expected in early 2026. These sharp jumps follow a 50% surge already recorded earlier this year.
Samsung, the world’s largest memory supplier, has increased chip prices by up to 60% amid the worsening shortage. NAND flash demand skyrocketed 60% in November 2025 due to AI workloads, leaving smartphone manufacturers scrambling for inventory.
With supply stretched thin, global smartphone memory stock has dropped to just four weeks—its lowest-ever level for budget devices.
AI Demand Is Squeezing Out Consumer Electronics
Artificial intelligence infrastructure companies like Nvidia are absorbing memory supplies at unprecedented rates. Their appetite for high-bandwidth DRAM and large-capacity NAND has created a bottleneck that directly affects smartphone availability.
Suppliers are prioritizing AI contracts, which offer higher margins, over consumer electronics. This leaves smartphone manufacturers few options. Even premium firms like Apple and Samsung face mounting pressure to raise prices as component costs soar.
Budget Smartphones Hit Hardest
Chinese manufacturers such as Xiaomi, Realme, and Vivo have already warned consumers to expect device price increases of 20%–30% by mid-2026 if the shortage continues.
These brands operate on thin margins and lack the long-term supply contracts that cushion larger companies. As a result, budget phones under $300 may see the most dramatic price hikes next year.
TrendForce’s December 2025 report highlights that both DRAM and NAND inventories have fallen below sustainable levels, leaving no room for component substitution or cost optimization.
How High Will Smartphone Prices Go?
Industry analysts predict average smartphone prices will rise to $465 in 2026, up from $457 this year. While this increase seems small on paper, the real impact will be felt most in entry-level and mid-range models facing acute cost pressure.
IDC and Counterpoint expect the steepest price jumps around Q2–Q3 2026, once new supply contracts with inflated pricing take effect. SK Hynix forecasts the shortage may persist into late 2027, suggesting prolonged volatility in smartphone pricing.
Can Manufacturers Avoid the Price Spikes?
Experts say no meaningful escape route exists. Memory suppliers are deliberately constraining output to maximize profit, and AI customers receive priority on every production line.
Manufacturers may attempt small adjustments—like offering phones with lower RAM or storage—but such reductions risk weakening competitiveness. Most will eventually pass higher costs on to consumers.
With no immediate resolution in sight, 2025–2026 may become the costliest period for smartphone upgrades in years.
