Chip Crunch: AI Drives Phone Prices to New Peaks

Artificial intelligence has turned the world’s memory chip supply into a bottleneck, pushing smartphone prices higher than ever. According to a recent study by a Boston‑based research firm, the shortage of memory chips is expected to crush phone makers who can no longer sell devices under $100. The analysis projects a 14% jump in the average price of smartphones this year, reaching $523 on average. It also warns that sales could drop 12. 9% in 2026, falling to just over a billion units – the lowest figure in more than ten years. The root cause is the AI boom. Data centers, which rely heavily on memory chips, have outpaced consumer electronics in demand. Major chip producers in Asia are now prioritising AI over phones, laptops and gaming consoles.Large firms like Apple and Samsung may weather the storm, while smaller Android‑based manufacturers could feel the squeeze most sharply. The report notes that no return to normal is expected for vendors or buyers. Memory chips, once a low‑margin business, have become crucial for AI’s growth. The need for more processing power and larger storage has shifted focus from standard DRAM to high‑bandwidth memory (HBM) used in data centers. Both DRAM and HBM prices have nearly doubled since the last quarter, forcing electronics makers to reduce memory usage or target premium markets. The top three suppliers – SK Hynix, Samsung and Micron – have seen their stocks hit record highs, and production lines are nearly full. Experts predict the shortage will linger into next year. High‑profile leaders, including a prominent electric‑vehicle CEO, have highlighted the risk and suggested building in‑house chip facilities to secure supply.