Why your next phone will probably cost more, and why AI is to blame
The memory chips inside your phone are being snapped up by AI data centres. Here's how that ends up on the price tag.
By Duangduean Studios
If you've looked at phone prices lately and wondered why everything costs more, a big part of the answer is this: the same memory chips that go into your phone are being snapped up by AI data centres.
Every phone, laptop and server needs memory. There's DRAM, the fast working memory, and flash storage for your photos and apps. Only a handful of companies make DRAM in serious quantities, mainly Samsung, SK Hynix and Micron.
AI servers are hungry for a special, very fast kind called HBM, short for high-bandwidth memory, which sits right next to the AI chip. Chipmakers love it because it's far more profitable than ordinary phone memory. The catch is that it uses up more factory capacity for every gigabyte. And you can't just build another factory when demand jumps. A new one takes years.
So when AI companies order servers in enormous numbers, the factories tilt towards HBM, ordinary memory gets scarcer, and its price goes up.
It's already in the shops
This has been building all year. Back in February, reports were describing smartphone prices hitting record highs as AI soaked up the memory supply. Industry tracker TrendForce says memory prices kept climbing through the third quarter of 2026, though the increases were starting to slow. And this month Nikkei Asia reported that Apple had told suppliers to cut production of the iPhone 18 Pro and Pro Max, with October orders 15 to 20 per cent below plan. A senior executive pointed straight at memory costs from the data-centre boom.
The economics are simple enough. Memory makers sell their factory time to whoever pays most, and right now that's AI companies with enormous budgets. Phone makers can absorb the cost, raise their prices, or quietly put less memory in each phone. Apple's cuts suggest the higher prices are already putting some people off.
If you're buying a phone soon
Mid-range phones get hit hardest, because memory is a bigger slice of what they cost to make. Read the spec sheet as well as the price, since some brands may keep the price the same and give you less RAM or storage. And last year's model, built before the latest increases, can be a genuinely good deal while stock lasts.
It won't last forever. New factories are on the way, and the increases were already slowing by the third quarter. How long the squeeze goes on depends on whether AI spending keeps growing at its current pace. For now, though, the AI boom has a small line item on your next phone bill.
Further reading: AI is gobbling up the world's memory chips (CNN) · AI server demand keeps memory prices up in 3Q26 (I-Connect007, TrendForce data) · AI memory boom pushes up electronics prices (UPI) · Apple cuts iPhone 18 Pro orders (AI Weekly, summarising Nikkei Asia)