Rising memory costs, fuelled by the artificial intelligence industry's growing appetite for components, could push prices of low-end smartphones up by around 30 per cent, forcing buyers to either postpone their upgrades or consider second-hand phones, according to a report by Jefferies.
The growing demand for memory components from AI companies is putting pressure on global supplies, with the technology expected to account for around 60 per cent of memory demand in CY27. These companies are targeting capital expenditure of around $1.5 trillion in the same year, which could keep memory prices elevated for several more quarters. Memory prices are expected to peak by mid-CY27, according to the report.
“Memory cost per unit is likely to have surged ~3x, from est $20 in CY25 to est $60-65 now,” the report said. For Android smartphones priced below $200, memory accounts for around 60 per cent of the total bill of materials, making these devices particularly vulnerable to price increases.
Jefferies expects global smartphone shipments to decline by 15 per cent annually to 1,067 million units in CY26 and 911 million units in CY27. A price hike of about 30% in low-end phones, the report said, “could defer new purchases or trigger second-hand affordable purchases.”
Memory is not the only component creating headaches for manufacturers. The report identified semiconductor shortages as the biggest supply-chain bottleneck. To contain costs, manufacturers are considering using chips that are one to two years old instead of the latest flagship processors.
The squeeze is already visible elsewhere. A 2GB LPDDR5X memory die, which cost around $6.8 in January, is now priced at about $30, according to Smart Analytics Global, and TeamGroup has said it expects the most severe shortages of DRAM and NAND flash between the fourth quarter of 2026 and the end of the second quarter of 2027, with supply and demand not balancing until the second half of 2028 at the earliest.
