High Demand for Memory Chips May Raise Smartphone Prices... What's the Story?

SadaNews - As AI data centers consume large amounts of memory chips used in electronic manufacturing, consumers may face rising prices for technological products, such as smartphones and laptops, according to warnings from manufacturers and analysts, as reported by the "French Press Agency".

Major tech companies around the world are spending huge amounts of money to build devices that power AI tools like "ChatGPT".

Experts clarify that this massive demand is putting pressure on the supply chain at a time when chip producers are intentionally keeping inventory low to avoid a price drop that could reduce their profits.

Louis Wei Ping, the head of China's giant electronics company "Xiaomi", stated that the pressure on the supply chain in terms of demand for memory chips in 2026 "will be much greater than this year".

He added that "everyone will likely see a significant increase in retail prices for products".

This is also what William Keating, the head of the technology and semiconductor consulting firm "Ingenuity", has predicted.

Keating told the "French Press Agency" that "the shortage will impact all companies that manufacture computers, smartphones, servers, and more".

He concluded that "the end result will ultimately be that consumers will pay more".

The demand is focused on DRAM memory chips and NAND storage components, which are used in everyday tools, but are also needed to handle the vast amounts of data processed by generative AI.

This has caused memory chip prices to rise, which in turn leads to increased revenues for companies producing them, such as South Korea's "Samsung" and "SK Hynix", and America's "Micron" and "SanDisk".

Last month, Kim Jai-jun from "Samsung Electronics" reported that "demand for AI-related servers continues to rise, far exceeding the industry's supply".

The company announced that it plans to build a new semiconductor plant in South Korea to meet the growing demand, while "SK Hynix" recently revealed its best quarterly financial performance in history, "amid the widespread rise in prices of DRAM chips and NAND components".

The "TrendForce" consulting office in the technology sector has lowered its forecasts for global production of smartphones and laptops in 2026.

It explained that "the memory industry has entered a phase of significantly rising prices, forcing brands at the end of the supply chain to raise retail prices".

This trend may also reflect on cars, although Keating pointed out that the technology associated with them is less reliant on memory chips.

Last week, "SMIC", China's largest chip manufacturer, announced that its customers are hesitant to place orders due to uncertainty about the number of smartphones, cars, and other products that the chip sector can meet demand for. This shortage has a dual cause.

Keating clarified that the demand driven by the AI sector exceeded expectations, but memory chip makers have also made "sharp cuts" in their spending to expand production capacity in recent years.

He stated that "their motto has essentially been to keep production capacity limited and prices high".

He added: "They did this intentionally to ensure that the recent collapse in memory chip prices that cost chip makers billions does not happen again".

Stephen Wu, founder of the "Cartage Capital" investment fund, pointed out that the rise in memory chip prices is "huge and this trend is ongoing".

He concluded: "Consumers and companies should expect higher prices for memory chips, and longer delivery times... until at least early 2026".