AI's Insatiable Appetite for Memory Chips Is Driving Up Smartphone Prices Worldwide

The age of cheap, plentiful memory chips is ending — and the bill is about to land in consumers' pockets.

As artificial intelligence infrastructure expands at breakneck speed across the globe, the voracious demand for memory components from data centers is draining supply that smartphone and computer manufacturers depend on. The result, according to industry analysts and trade groups, is a looming price squeeze that could reshape the consumer electronics market in 2026 and beyond.

Memory chip prices surged roughly 50 percent last year, according to analyses by the World Semiconductor Trade Statistics institute cited by Wolfgang Weber, CEO of the German Electro and Digital Industry Association (ZVEI) AI-fueled chip shortage drives up smartphone pricesdw.com·SecondaryThe benefits of artificial intelligence (AI) may come at a high cost for consumers. Surging demand for memory chips is driving up the price of smartphones and computers — including in Germany. "The AI boom, along with the massive investments in infrastructure and data centers that come with it, is having a noticeable impact on the memory chip market," Wolfgang Weber, CEO of the German Electro and Digital Industry Association (ZVEI), told DW.. The spike reflects a fundamental tension at the heart of the technology sector: the same DRAM chips powering AI servers built by Nvidia, using components from SK Hynix and Samsung, are also essential components inside every smartphone sold worldwide.

The numbers are stark. In the first half of 2025, the global semiconductor market reached $346 billion — an 18.9 percent increase over the previous year AI-fueled chip shortage drives up smartphone pricesdw.com·SecondaryThe benefits of artificial intelligence (AI) may come at a high cost for consumers. Surging demand for memory chips is driving up the price of smartphones and computers — including in Germany. "The AI boom, along with the massive investments in infrastructure and data centers that come with it, is having a noticeable impact on the memory chip market," Wolfgang Weber, CEO of the German Electro and Digital Industry Association (ZVEI), told DW.. WSTS forecasts overall growth of 22 percent for 2025, bringing the market to $772 billion, with an even sharper rise of more than 25 percent expected for 2026, pushing toward $975 billion AI-fueled chip shortage drives up smartphone pricesdw.com·SecondaryThe benefits of artificial intelligence (AI) may come at a high cost for consumers. Surging demand for memory chips is driving up the price of smartphones and computers — including in Germany. "The AI boom, along with the massive investments in infrastructure and data centers that come with it, is having a noticeable impact on the memory chip market," Wolfgang Weber, CEO of the German Electro and Digital Industry Association (ZVEI), told DW..

For consumers, the market research firm IDC has quantified the likely damage. In a moderate scenario, average smartphone selling prices could rise by 3 to 5 percent AI-fueled chip shortage drives up smartphone pricesdw.com·SecondaryThe benefits of artificial intelligence (AI) may come at a high cost for consumers. Surging demand for memory chips is driving up the price of smartphones and computers — including in Germany. "The AI boom, along with the massive investments in infrastructure and data centers that come with it, is having a noticeable impact on the memory chip market," Wolfgang Weber, CEO of the German Electro and Digital Industry Association (ZVEI), told DW.. In a pessimistic scenario, the increase could reach 8 percent AI-fueled chip shortage drives up smartphone pricesdw.com·SecondaryThe benefits of artificial intelligence (AI) may come at a high cost for consumers. Surging demand for memory chips is driving up the price of smartphones and computers — including in Germany. "The AI boom, along with the massive investments in infrastructure and data centers that come with it, is having a noticeable impact on the memory chip market," Wolfgang Weber, CEO of the German Electro and Digital Industry Association (ZVEI), told DW.. Counterpoint Research, another industry analytics firm, projects an average selling price jump of 6.9 percent year-on-year in 2026, nearly double its earlier forecast of 3.6 percent growth. Global smartphone shipments could fall 2.1 percent as a result, compared with a previous outlook of flat-to-positive growth.

The component cost pressures are not evenly distributed. For low-end smartphones priced below $200, the bill of materials — the total cost of producing a single device — has increased 20 to 30 percent since early 2025. Mid- and high-end devices have seen material costs rise 10 to 15 percent. Counterpoint warns that memory prices could climb another 40 percent through the second quarter of 2026, pushing total component costs up an additional 8 to 15 percent above already elevated levels.

The proportion of memory in total smartphone component costs tells a story of accelerating pressure. In 2020, memory accounted for roughly 8 percent of total component costs in a device such as the iPhone 12 Pro Max . By September 2025, that share had climbed to approximately 10 percent in the iPhone 17 Pro Max AI-fueled chip shortage drives up smartphone pricesdw.com·SecondaryThe benefits of artificial intelligence (AI) may come at a high cost for consumers. Surging demand for memory chips is driving up the price of smartphones and computers — including in Germany. "The AI boom, along with the massive investments in infrastructure and data centers that come with it, is having a noticeable impact on the memory chip market," Wolfgang Weber, CEO of the German Electro and Digital Industry Association (ZVEI), told DW.. Counterpoint Research estimates this could reach 20 percent as prices continue to rise AI-fueled chip shortage drives up smartphone pricesdw.com·SecondaryThe benefits of artificial intelligence (AI) may come at a high cost for consumers. Surging demand for memory chips is driving up the price of smartphones and computers — including in Germany. "The AI boom, along with the massive investments in infrastructure and data centers that come with it, is having a noticeable impact on the memory chip market," Wolfgang Weber, CEO of the German Electro and Digital Industry Association (ZVEI), told DW..

Samsung Electronics President Wonjin Lee acknowledged the pressure in a late January interview with Bloomberg. He indicated the company does not want to pass the burden to consumers but conceded that repricing is becoming unavoidable . Apple has not publicly commented on possible price increases, though Morgan Stanley analysts predict the company will likely hold base model prices steady at their current high level while potentially charging more for devices with larger storage capacities AI-fueled chip shortage drives up smartphone pricesdw.com·SecondaryThe benefits of artificial intelligence (AI) may come at a high cost for consumers. Surging demand for memory chips is driving up the price of smartphones and computers — including in Germany. "The AI boom, along with the massive investments in infrastructure and data centers that come with it, is having a noticeable impact on the memory chip market," Wolfgang Weber, CEO of the German Electro and Digital Industry Association (ZVEI), told DW..

The competitive landscape is tilting in favour of established giants. Counterpoint's research director MS Hwang noted that Apple and Samsung are best positioned to weather the coming quarters, while companies with less financial flexibility — particularly Chinese smartphone makers operating in the mid-to-lower end of the market — face a more difficult balancing act between market share and profit margins.

Some manufacturers are already exploring cost-cutting measures that could affect device quality. According to Counterpoint, companies may downgrade components such as camera modules, displays and audio systems, or reuse older components to absorb rising memory costs without passing the full increase to consumers. Others are likely to incentivize consumers toward purchasing their higher-priced premium devices, where margins are more resilient.

In Germany, the effects are already measurable. The average price of a new smartphone increased from 591 euros in 2024 to 605 euros last year, according to industry association Bitkom . Yet consumer demand remains weak. Sebastian Kloess, Head of Markets and Technologies at Bitkom, told DW that the domestic market faces a period of stagnation or even slight decline AI-fueled chip shortage drives up smartphone pricesdw.com·SecondaryThe benefits of artificial intelligence (AI) may come at a high cost for consumers. Surging demand for memory chips is driving up the price of smartphones and computers — including in Germany. "The AI boom, along with the massive investments in infrastructure and data centers that come with it, is having a noticeable impact on the memory chip market," Wolfgang Weber, CEO of the German Electro and Digital Industry Association (ZVEI), told DW..

The squeeze is producing at least one notable countercurrent: a boom in refurbished devices. According to a joint analysis by market research firm NIQ, the Society for Consumer Electronics, and IFA Management, refurbished smartphones reached a 9 percent market share in the EU by July 2025, up from just 5 percent in January . In some markets, refurbished models now account for more than 40 percent of online sales in the sub-600-euro segment AI-fueled chip shortage drives up smartphone pricesdw.com·SecondaryThe benefits of artificial intelligence (AI) may come at a high cost for consumers. Surging demand for memory chips is driving up the price of smartphones and computers — including in Germany. "The AI boom, along with the massive investments in infrastructure and data centers that come with it, is having a noticeable impact on the memory chip market," Wolfgang Weber, CEO of the German Electro and Digital Industry Association (ZVEI), told DW..

The underlying tension is unlikely to resolve quickly. Germany's ZVEI warns that the chip shortage between 2021 and 2023 alone caused more than 102 billion euros in economic damage to the country . Weber cautioned that bottlenecks in key technologies pose a serious ongoing problem for the broader economy AI-fueled chip shortage drives up smartphone pricesdw.com·SecondaryThe benefits of artificial intelligence (AI) may come at a high cost for consumers. Surging demand for memory chips is driving up the price of smartphones and computers — including in Germany. "The AI boom, along with the massive investments in infrastructure and data centers that come with it, is having a noticeable impact on the memory chip market," Wolfgang Weber, CEO of the German Electro and Digital Industry Association (ZVEI), told DW.. With AI investment showing no signs of slowing and data center construction accelerating globally, the competition for memory chips between enterprise and consumer applications appears set to intensify through 2026 and likely beyond — leaving consumers to absorb a growing share of the cost of the AI revolution through the devices they carry in their pockets.