Why AI Is Making Your Next Phone and Laptop Cost More: The Memory Chip Squeeze, Explained

If a new phone or laptop has looked more expensive lately, you’re not imagining it. The AI boom is soaking up the world’s supply of memory chips, and the bill is landing on ordinary gadget buyers.

Here’s what’s happening, how big the price moves are, and what it means if you’re shopping for a device this holiday season.

The short version

Memory chips (DRAM and NAND flash storage) go into nearly every phone, PC, tablet and game console.
Three companies, Samsung Electronics, SK Hynix and Micron Technology, control about 90% of the global memory market, according to Rest of World.
Those makers have shifted much of their production toward AI data centers, which pay top dollar for huge quantities of memory.
With less left over for consumer devices, prices have jumped and device makers are passing the cost on.

Why memory, and why now?

AI systems need enormous amounts of fast memory to train and run models. Big U.S. tech companies’ spending on data centers is projected to exceed $1.3 trillion in 2027, Rest of World reports.

“All of them pivoted the vast majority of their supply towards AI centers instead of consumer electronics,” Ramon Llamas, a research director at market research firm IDC, told Rest of World.

Market tracker TrendForce says memory suppliers are “shifting capacity toward server products, leaving mobile DRAM allocations tight.” In other words, the chips that would have gone into phones and laptops are going into AI servers instead.

How big are the price increases?

Very big, and they aren’t over. TrendForce expects contract prices for conventional DRAM to rise another 10% to 15% in the fourth quarter of 2026 compared with the third, with NAND flash prices up 15% to 20%.

Chipmakers’ results show the scale. Data centers want storage too. TrendForce expects demand for enterprise SSDs, the storage drives used in servers, to jump more than 80% year over year as AI deployment grows. “Agentic AI is driving exponential growth in data volumes for real-time retrieval and caching,” the firm said.

Taiwan’s Nanya Technology reported third-quarter revenue up 61.9% from the previous quarter and said it can meet only about 50% to 60% of customer demand, TrendForce reported. It expects its average DRAM prices to rise about 10% more in the fourth quarter.

U.S.-based Micron reported revenue of $54.23 billion for its fiscal fourth quarter, up from $11.32 billion a year earlier. For its full fiscal year, revenue more than tripled to $133.19 billion. It expects even more, about $61.5 billion, in the current quarter.

What it’s doing to phones

Fewer phones, higher prices

IDC forecast in August that global smartphone shipments will fall 16.7% in 2026 to just over 1 billion units, the steepest annual drop it has recorded. At the same time, the average selling price of a smartphone is expected to rise 27.6% to $581.

“The memory tsunami…is now hitting the market in full, and consumers are starting to pay the AI bill,” said Francisco Jeronimo, IDC’s vice president for worldwide client devices.

Budget phones are hit hardest

Memory makes up a bigger share of the cost of a cheap phone than an expensive one, so the low end is getting squeezed out. Shipments of phones under $100 fell nearly 60% year over year in the second quarter, IDC says. In 2025, about 173 million such phones were shipped.

Rest of World reports that existing smartphone models cost about 15% more globally this year, and new models are about 25% more expensive than last year’s. In one example, Xiaomi’s Redmi 15C in India went from about $140 to $190.

“What used to be below $150 may become below $250, or even $300,” said Ivan Lam, a senior analyst at Counterpoint Research.

The consequences go beyond price tags in poorer countries. “Consumers make difficult sacrifices to keep themselves online,” Claire Sibthorpe, head of digital inclusion at the mobile industry group GSMA, told Rest of World. “They might delay upgrading, borrow or share their devices, remain on feature phones, or go offline entirely.”

The U.S. is getting off lighter

American buyers are feeling it less than most. Rest of World puts the average price increase in the U.S. at about 5%, compared with 21% in India and 18% to 19% across the Middle East, Africa and Asia-Pacific. IDC says developed markets such as the U.S. and U.K. are more resilient partly because of phone financing and carrier deals, which spread the cost over time.

There’s also a platform split. IDC expects Android phone shipments to fall 24.3% this year while iPhone shipments slip only 1.3%, pushing Apple’s share to a record 23.6%. Many of the cheapest phones run Android, so they take the biggest hit.

What it’s doing to PCs and tablets

The squeeze isn’t limited to phones. Back in March, IDC cut its 2026 forecast for global PC shipments to an 11.3% decline, while predicting the total value of PCs sold would still rise 1.6% to $274 billion, because each machine costs more. Tablet shipments were forecast to fall 7.6%.

“The era of bargain-priced PCs and tablets is behind us for now,” said IDC research manager Jitesh Ubrani.

TrendForce adds a detail worth knowing if you’re shopping: some PC makers are reducing SSD storage in mainstream models to keep costs down. So a laptop at last year’s price may come with less storage than last year’s model.

How long will this last?

Don’t hold your breath. IDC said in March that it expects memory shortages to last well into 2027, with prices possibly starting to ease in 2028, though probably not back to 2025 levels. Many chipmakers have also locked large shares of their supply into long-term contracts: Nanya says more than 60% of its supply is now under such agreements, according to TrendForce.

Who’s winning

Memory makers are having a record run. Micron, for example, reported fourth-quarter net income of $37.7 billion under standard accounting rules, and CEO Sanjay Mehrotra said the company expects “an even stronger fiscal 2027.” Nanya posted record September revenue, up more than 576% from a year earlier. Fellow Taiwanese chipmaker Winbond said prices for its specialty DRAM and some flash memory rose 40% to 50% in the third quarter alone, TrendForce reported.

What it means for you

None of this means you need to panic-buy. But a few practical points, our take on what the forecasts suggest, may help if a new device is on your list:

If you need a device soon, there may be little reason to wait. Forecasters expect prices to stay high into 2027.
Check the specs, not just the price. With makers trimming storage and memory to hit price points, compare RAM and storage carefully, especially on laptops.
Make your current device last. A new battery, a storage cleanup or a fresh case can buy a phone another year.
Consider refurbished or last year’s model. Devices made before the worst of the price increases can be good value.
Be wary of financing traps. Spreading the cost over 24 or 36 months makes a phone feel cheaper, but read the terms before you sign.

The catch

Forecasts are educated guesses, and this market has moved fast in both directions before. IDC’s PC forecast dates from March and may have changed since. Price figures also vary widely by country, model and retailer, and averages can hide big differences. If AI spending slows or new chip factories come online faster than expected, prices could ease sooner. If AI demand keeps climbing, the squeeze could last longer.

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