How the AI Boom Is Driving Up Phone Prices

The next price increase on a smartphone may have little to do with its screen, camera or battery. The pressure is coming from memory chips, the components that let devices run apps and process information.

DRAM provides short-term working memory in phones, laptops, desktops and gaming consoles. NAND chips also appear across consumer electronics. The supply of both types has tightened sharply after AI data centres redirected demand toward memory used in large computing systems.

The change has been rapid. A 16-gigabyte RAM chip that cost as little as $4.76 last year could cost almost $60 by June, according to the WA Data Science Innovation Hub. Technology executives have described memory chips as their most expensive component, putting budget smartphones especially under pressure.

Samsung has increased prices for phones and tablets, with higher-storage models costing up to $115 more. Microsoft, Google and Apple have also raised prices on some phones, computers and tablets. Valve delayed the launch of new hardware in February because of uncertainty over memory costs, then announced in June that its Steam Machine would cost $US1,049, hundreds of dollars above estimates made before the shortage.

AI servers use a specialised form called high-bandwidth memory, or HBM. It helps systems process large volumes of data quickly, and a data centre can require tens of thousands of memory chips. Alex Jenkins, director of the WA Data Science Innovation Hub, said manufacturers had deliberately redirected the supply chain. Smart TVs, digital cameras and smart-home devices could also face higher prices.

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