DRAM memory crisis: why your next phone will be more expensive

What happened?

Carl Pei, CEO of Nothing, has stated that memory is now the most expensive component in a smartphone, surpassing the processor and screen, and can account for more than 50% of the total hardware cost. This situation is due to an unprecedented DRAM memory crisis, where prices have soared up to 300% in some segments, according to Xataka. Pei had already anticipated this situation in January 2025, and now it is confirmed that the trend has worsened. Demand for memory from AI data centers has diverted production to those clients, reducing supply for the consumer market.

Why is it important?

The crisis directly affects consumers' wallets. Manufacturers, faced with rising costs, are forced to raise smartphone prices. Additionally, memory shortages could limit device capabilities, such as the amount of RAM or storage, or make versions with more memory more expensive. Historically, the most expensive components in a smartphone have been the processor and screen. However, since 2024, DRAM and NAND Flash prices have experienced a sustained increase due to high demand from artificial intelligence. According to TrendForce data, DRAM prices rose 50% in 2024 and are expected to increase another 30% in 2025. This means a mid-range smartphone that previously cost 300 euros could now cost 350 or 400 euros if it includes 8 GB of RAM and 128 GB of storage.

Consequences for the industry

Data centers of big tech companies (Microsoft, Amazon, Google, Meta) consume enormous amounts of DRAM and NAND Flash to train and run AI models. This has diverted production to those clients, reducing supply for the consumer market. The trend will continue as long as AI demands more memory. Companies like Samsung and SK Hynix, the largest memory manufacturers, have redirected their production lines toward high-capacity modules for servers, leaving less capacity for lower-density chips used in smartphones. This has caused prices of LPDDR5X (RAM for phones) and UFS 4.0 (storage) to also skyrocket. According to Xataka, some Chinese manufacturers like Xiaomi have already begun reducing base memory in their entry-level models to keep prices competitive.

"Memory costs more than the processor and screen combined" — Carl Pei, CEO of Nothing.

What should readers know?

• Smartphone prices will rise, especially in mid-range and high-end segments. An increase of 10-15% in the final price of models with 12 GB of RAM or more is estimated.
• Manufacturers may reduce base memory or eliminate expansion options. For example, some models could go from 8 GB to 6 GB of RAM to save costs.
• The crisis is not temporary: it is expected to last at least until 2026, according to IDC analysts. AI demand continues to grow, and no relaxation in memory production for consumer use is foreseen.
• Alternatives like LPDDR5X memory or UFS 4.0 are also affected. Prices of these components have risen between 20% and 40% in the last year.

In summary, AI demand is reshaping the memory supply chain, and consumers will pay the price. Staying informed and adjusting purchase expectations is key. If you are thinking of buying a new phone, consider doing so soon, before prices rise further. You can also opt for models with less memory and use cloud storage, although the latter may have privacy implications and recurring costs.