The Era of Cheap Smartphones Is Ending: RAM and NAND Costs Surge
Originally published in Turkish. Read the original →
With the advance of AI technologies, the huge rise in RAM and NAND memory production costs is dealing a heavy blow to the smartphone market. The affordable smartphone segment faces the danger of disappearing.
The smartphone market is witnessing one of the biggest breaks in the history of technology. While the AI revolution has pushed the software world and cloud systems forward, it has also created a huge explosion in demand for the hardware infrastructure these massive systems need. This demand shock has triggered an unprecedented price surge across the hardware supply chain, especially in memory (RAM) and storage (NAND) chips.
So much so that labels like "smartphones under $100" or "affordable entry-level models," which once defined an era, are about to fade into the dusty pages of technology history over the coming quarters. Market research clearly shows that the rise in mobile hardware costs will be passed directly on to consumers' wallets.
Why Have Costs Soared? The AI Effect
Cloud-based AI models, and especially on-device AI algorithms known as "Edge AI" that run directly on the device, require much higher-capacity and faster RAM in smartphones. Even simple text generation or image analysis requires gigabytes of instant memory allocation.
Major memory manufacturers (Samsung, SK Hynix, Micron, etc.) have redirected their production lines and capacity to far more profitable server-grade HBM (High Bandwidth Memory) and AI-focused high-capacity chips. This dramatic squeeze in the production of standard LPDDR packages and eMMC/UFS storage units for mobile devices has upset the balance of supply and demand and sent prices out of control.
According to the latest market reports:
* An increase of up to 50% in mobile RAM costs is being observed. * In mobile NAND (storage) costs, this increase reaches as high as 90%.
The Biggest Blow: Entry-Level (Cheap) Phones
Looking at the total Bill of Materials (BOM), there is a proportional gulf between flagship models and entry-level devices.
According to research data published for the first quarter of 2026, the 6GB LPDDR4X memory and 128GB eMMC storage found as standard in an entry-level smartphone under $200 now account on their own for 43% of that phone's production cost. That is a sharp 25% increase compared with data from just a few months ago. In an even bleaker picture, these parts' share of the total material cost is expected to reach an incredible 54% in the second quarter of the year.
So what does this mean? The budget manufacturers can allocate to the display, processor, camera, battery and chassis will shrink. To keep the phone "cheap," the quality of other components will be sacrificed to the maximum; and when even that is not enough, the device's sticker price will inevitably go up.
It's No Different in the Mid-Range and High End
The crisis has shaken not only cheap phones but the whole ecosystem. The situation in the mid and upper tiers is not very encouraging either:
* Mid-Range Breakdown: In a typical mid-range model with 8GB LPDDR5X RAM and 256GB UFS 4.0 storage, memory and storage accounted for 25% of the total cost in the first quarter of 2026, and second-quarter projections expect this share to rise to 36%. * High-End (Premium) Breakdown: In top-end devices equipped with 16GB LPDDR5X (HKMG) RAM and huge 512GB UFS 4.1 storage, which have turned into pocket computers, the cost share was around 30% in the first quarter and will exceed 41% in the second quarter.
Another factor driving the cost increase in these flagships is said to be the high costs brought by next-generation 2nm chip manufacturing processes. As chips get smaller, manufacturing gets harder and foundry costs multiply.
What Awaits Consumers?
The point market analysts agree on is that a strong upward movement in smartphone sticker prices is inevitable.
* There is price-hike pressure of roughly $30 to $50 on affordable entry-level phones. This increase means the "under $100" device segment, which once achieved huge sales figures, will effectively be wiped off the map. * The premium / flagship side faces a harsher picture: price inflation of roughly $150 to $200 is forecast.
In the end, since manufacturers will not be able to absorb the cost shock created by the memory crisis from their own profit margins, the bill will be passed on to end consumers. If this cost-increase trend continues throughout the current year, it looks set to make people postpone their plans to buy a new phone and even to push up the value of devices on the second-hand market. For quite a while, the concept of "affordable hardware" has been shelved.
