RAM shortage may make smartphones costlier for longer

Smartphone prices could come under more pressure as the global shortage of memory chips continues for several more years. Micron, one of the world's biggest memory manufacturers, expects demand to remain higher than supply through 2027 and 2028, which could keep memory prices elevated.

The warning comes as phone makers are already dealing with rising component costs. Companies including Apple, Nothing, Xiaomi and Samsung have increased prices of some products, while smartphone prices in India have also gone up this year.

Micron CEO and chairman Sanjay Mehrotra said the company has already sold most of the memory it expects to produce next year. He also told investors that customers will pay “much higher prices” than they paid this year.

“In calendar 2027 as well as 2028, we see demand exceeding supply,” Mehrotra said. He added that the industry could face tighter supply conditions in both years compared with 2026.

The growing demand for artificial intelligence is one of the main reasons behind the shortage. AI data centres need large amounts of memory, including high-bandwidth memory (HBM), which works with powerful processors to handle large volumes of data.

Micron said demand for HBM is growing faster than demand for conventional DRAM. The company is also trying to improve the profitability of its HBM business as demand for AI hardware increases.

Samsung has also warned about the impact of rising HBM production on regular memory supplies. According to Reuters, Samsung Executive Vice President Kim Taewoo said HBM could account for almost 30 per cent of DRAM makers' total wafer capacity next year, compared with about 20 per cent currently.

HBM and standard DRAM use the same wafer capacity. This means that if manufacturers dedicate more capacity to HBM for AI systems, there could be less capacity available for regular DRAM used in products such as smartphones and computers.

According to The Register, Micron plans to spend $25 billion in the first half of its new financial year as it expands its manufacturing capacity. New factories are expected to come online in 2028. However, the company does not expect these facilities to immediately solve the supply problem. Micron said it currently has no clear timeline for when memory supply and demand will return to balance.

The company is benefiting from the strong demand. Its cloud memory business, which focuses on HBM, reported an 83 per cent gross margin in the fourth quarter, compared with 59 per cent a year earlier. Its core datacentre business, which sells more DRAM, reported a 90 per cent gross margin, up from 41 per cent last year.Phone buyers could pay more

The pressure is already visible in India's smartphone market. Counterpoint Research says smartphone prices in India rose 16 per cent on average in the first half of 2026. The average selling price reached $318 in the second quarter.

Cheaper phones saw some of the biggest increases. Smartphones priced below Rs 10,000 became around 32 per cent more expensive on average, while shipments in that segment fell 65 per cent year-on-year during the first half of 2026.

Bloomberg reported that Huawei is also preparing to increase smartphone prices as memory costs rise. The company's consumer business chief Richard Yu said Huawei's smartphone costs had increased by an average of $200, although he did not specify the period being compared.

If memory supply remains tight for the next two years, smartphone makers could face further cost increases. How much of that reaches buyers will depend on how much each company absorbs and how it prices its phones.- EndsAlso Read | Sridhar Vembu says Zoho built its own cloud, now offering it free to studentsAlso Read | Zoho founder Sridhar Vembu explains the problem with telling employees to be disciplinedAlso Read | Sridhar Vembu says it is becoming difficult to do business after memory prices climb 500% in 12 months

Ankita Garg is a tech journalist with more than 9 years of experience. She is always curious about new gadgets and loves writing about them. When not writing, you will find her painting or sketching.