AI Memory Chip Prices (2026): Why Cheap Phones Could Cost 30% More

A new Jefferies report warns that the AI boom is about to make the cheapest smartphones noticeably more expensive. Rising memory chip prices, driven by demand from artificial intelligence, could push the price of low-end handsets up by about 30 percent, according to the report, putting the most affordable phones out of reach for millions of buyers around the world.

Why Memory Chip Prices Are Rising

The reason is straightforward: AI needs memory, and lots of it. Training and running large AI models requires huge amounts of high-bandwidth memory, and the companies building AI data centres are buying it as fast as chipmakers can produce it. Memory manufacturers, in turn, are prioritising their biggest and most profitable AI customers. Phone makers are left competing for what remains, and that scramble is what is driving memory chip prices higher month after month.

The numbers in the Jefferies report are stark. The memory in a typical smartphone cost about $20 in 2025; that figure has now risen to $60 to $65, nearly three times as much in the space of about a year. At the same time, AI could account for about 60 percent of all memory demand in 2027, while capital expenditure by the AI industry could reach about $1.5 trillion in the same year. In other words, memory chip prices are rising because the world’s most valuable industry is now bidding for the same components that go into a $150 phone.

What Rising Memory Chip Prices Mean for Buyers

Budget phones will feel the squeeze first. Memory is a far bigger share of the cost of a cheap handset than it is of a flagship, so a $40 jump in the memory bill cannot be absorbed quietly. Makers of affordable phones have three unappealing choices: raise prices, cut the amount of RAM and storage they offer, or stop selling some of their cheapest models altogether. Jefferies expects the share of affordable phones in global shipments to fall from 42 percent in 2025 to 24 percent in 2026, as rising memory chip prices push the entry point of the market upwards.

The downturn is expected to show up in sales volumes too. Jefferies projects global smartphone shipments of 1.067 billion units in 2026, falling to 911 million in 2027, as higher prices and thinner choices discourage people from upgrading. These are projections, not facts, and they depend on memory costs staying high, but they point to a market that is about to get smaller and more expensive at the same time. As memory chip prices climb, the people who wait longest between upgrades are usually the ones who can least afford a new phone, which is exactly the group the affordable end of the market serves.

When Will Memory Chip Prices Peak?

Jefferies expects memory prices to peak around the middle of 2027, although the timing is uncertain and could shift. New memory factories take years to build, and demand from AI shows no sign of slowing, so any relief is unlikely to arrive quickly. If the peak does come around mid-2027, phone makers could start to regain room to manoeuvre in the second half of that year, with cheaper memory eventually feeding through into cheaper handsets. Until then, the pressure on memory chip prices stays pointed in one direction: up.

For buyers, the practical advice is simple. If you need an affordable phone soon, buying before the next round of price rises may be cheaper than waiting, and it is worth comparing how much RAM and storage you actually get for the money, since some brands will quietly trim specifications rather than raising the sticker price. Mid-range phones, which already carry more memory, may offer better value than the very cheapest models in the months ahead.

The Bigger Picture: AI’s Appetite for Memory

The same AI boom that is lifting memory chip prices is reshaping the whole hardware industry. Chipmakers that once built their businesses around phones and laptops are now racing to serve data centres, and we recently covered how Qualcomm is moving into data-center chips to chase the same AI demand. On the consumer side, manufacturers are also leaning harder on AI features to justify higher prices, and the AI chip in your next laptop is becoming a headline selling point. Memory is simply the component where the collision between AI demand and everyday devices is most visible, and most painful.

Whether the 30 percent figure proves right will depend on how long the memory shortage lasts and how much of the extra cost phone makers pass on instead of absorbing. What is already clear is that the cheapest phone of 2027 will not cost what the cheapest phone of 2025 cost. For the full figures behind the memory chip prices warning, see the Devdiscourse report on the Jefferies findings. We will keep tracking memory costs and what they mean for phone prices as the market develops.