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Planning to buy smartphone? Prices to rise 30% soon

By · Published by Everything Blog

In short

Surging capital expenditures from data centers will cause AI to consume an estimated 60% of total memory supplies by 2027. Smartphone memory costs have surged to between $60 and $65 per unit, forcing manufacturers to consider using older processors or cutting budget offerings altogether. Consequently, worldwide phone shipments are projected to drop to 911 million units by 2027. Sub-$200 Android models will be hit hardest, pushing consumers toward refurbished alternatives.

Key points

  • Artificial intelligence infrastructure is absorbing global memory chip capacity and infla…: Artificial intelligence infrastructure is absorbing global memory chip capacity and inflating components for other tech sectors.
  • Budget Android manufacturers face severe margin compression because memory chips represen…: Budget Android manufacturers face severe margin compression because memory chips represent roughly 60% of their total materials bill.
  • Premium smartphones priced above $600 are projected to expand their global market share t…: Premium smartphones priced above $600 are projected to expand their global market share to 38% by 2026.

Sources checked by our analysis pipeline: 1

Why could smartphone prices increase by 30%?

The growing demand for memory chips from AI companies is emerging as a major reason behind the expected price increase. Data centres and AI infrastructure require large quantities of memory, putting pressure on supplies available to other industries, including smartphone manufacturing.According to Jefferies, memory demand from the AI industry could account for around 60% of total demand in calendar year 2027 (CY27). The report also highlighted the massive investments planned by AI companies. Their targeted capital expenditure could reach around $1.5 trillion in CY27. This spending is expected to keep memory prices elevated for several more quarters.

The impact on smartphone manufacturers is already becoming visible. Jefferies estimates that the memory cost per smartphone has increased nearly threefold, from approximately $20 in CY25 to $60-$65 currently. Memory is particularly important for affordable smartphones, where manufacturers have limited room to absorb additional expenses without affecting their margins or retail prices.

Budget Android phones could face the biggest price shock

The affordable smartphone segment is likely to bear the maximum impact of rising memory costs.…

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