Editor's note - This cover image is AI-generated
As we have been reporting for weeks, the shortage of memory chips across the world will raise the prices of smartphones this year. According to new research from Counterpoint Research, rising DRAM and NAND flash costs are significantly increasing the bill of materials for smartphones across all price segments, forcing manufacturers to reconsider their component strategies.
The impact is especially severe in the entry-level segment, where thin margins leave little room for manufacturers to absorb rising component costs. Analysts say the sudden surge in memory prices is creating structural changes in how smartphones are built and priced.
Entry-Level Smartphones Face the Biggest Impact
Devices priced below $200 (~RM780) are expected to experience the most pressure from rising memory costs. In the first quarter of 2026 alone, the total bill of materials for entry-level smartphones could increase by more than 20% quarter on quarter due to the surge in memory prices.
Memory components may account for as much as 43% of the total bill of materials for these budget devices. As a result, smartphone brands that depend heavily on entry-level models to maintain market share could face declining margins or short-term financial losses. Industry analysts warn that traditional cost-cutting measures, such as using cheaper components or reducing features, may not be enough to offset the rising costs.
Mid Range and Premium Phones Also Feel the Pressure
While budget phones are the hardest hit, mid-range and premium smartphones are not immune to the rising cost of memory. For mid-tier devices priced between $400 (~RM1.5K) and $600 (~RM2.3K), DRAM and NAND flash are expected to take up a larger share of overall component costs in the coming quarters. Meanwhile, the bill of materials for flagship smartphones could rise by as much as $100 (~RM390) to $150 (~RM588) by the second quarter of 2026.
These increases are largely driven by surging DRAM and NAND prices. DRAM costs alone are projected to rise by more than 50% sequentially, while NAND flash prices could jump by over 90% in the same period.
Smartphone Prices Rise in 2026
With memory becoming one of the most expensive components inside smartphones, manufacturers may eventually pass these costs to consumers. Analysts suggest entry-level smartphones could see retail price increases of around $30 (~RM100), while some premium models might rise by as much as $150 (~RM588)to $200 (~RM784).
The growing demand for memory chips from artificial intelligence infrastructure is a key driver behind the shortage. Data centers and AI servers are increasingly competing with consumer electronics manufacturers for the same supply of DRAM and NAND chips.
A Structural Shift in the Smartphone Industry
The current memory price surge could have lasting consequences for the smartphone market. Manufacturers may begin adjusting their product strategies by reducing memory configurations in lower-priced devices, redesigning hardware specifications, or increasing retail prices.
In Malaysia, the first signs are already here. The Samsung Galaxy S26 Series already start from RM5199, a big jump from the predecessors, which started at RM3999 back in 2025. There will be more phone launches this year, so we will keep an eye on the prices. Stay tuned for more trending tech news at TechNave.com.
COMMENTS