For decades, smartphones have become cheaper and more powerful every year. Now, that trend is breaking. The main reason? Memory chips.

Memory is a key part of every smartphone. It holds the data your phone’s processor works on. But making memory chips is very expensive and hard. Only three companies—Samsung, SK Hynix, and Micron—make most of the world’s memory.

Recently, those companies shifted much of their production to a new kind of memory called high-bandwidth memory, or HBM. HBM is essential for AI data centers. It moves data faster than normal smartphone memory but takes up more chip space to make.

In 2023, only about 2% of memory production focused on HBM. By the end of 2026, that number will rise to around 20%. That means less memory is left for phones and laptops.

Why Memory Production Limits Matter

Memory factories cost $15 to $20 billion to build. They take years to start producing good chips. Because of this, manufacturers avoid building too many factories. They keep supply tight to avoid crashes in prices that hurt profits.

When AI started demanding more HBM, memory makers didn’t build new factories fast enough. Instead, they took capacity away from regular memory used in consumer devices. This pushed up prices for the kind of memory phones use, called LPDDR.

The Reality for Cheap Smartphones

Between early 2025 and early 2026, prices for LPDDR4 memory jumped 250%. LPDDR5 prices rose 220%. This made the memory inside cheap phones cost much more.

For budget phone makers like Transsion, Oppo, and Vivo, this is a big problem. They buy older parts on the spot market and sell phones with tiny profits. Suddenly, those phones cost twice as much to make.

In places like Africa and India, where many people buy phones under $100, this has caused a crash in sales. India’s sub-$100 market shrank 59% in early 2026. Transsion cut shipments by 40% and saw profits drop by more than half.

This means millions of people who once got online cheaply may now struggle to afford a smartphone. The very devices that helped connect the poorest parts of the world are becoming too expensive.

Big Brands Feel the Pinch Too

The memory crunch isn’t just hitting cheap phones. Samsung couldn’t secure a long-term memory supply deal even with its own memory division. Its Galaxy S26 shipped with less memory and a higher price.

Dell raised laptop prices 15% to 20% in late 2025. Apple had to pay double for memory chips on the iPhone 17 Pro, causing delays in new product releases. The cost of memory is taking over the bill of materials for many devices.

Experts expect memory costs to make up 45% of an iPhone’s component cost by 2027, up from about 10% today. This forces companies to raise prices or accept lower profits.

What’s Next for Memory and Smartphones?

Memory makers are building new factories focused on HBM, but these won’t open until 2027 or 2028. Until then, supply will stay tight. Some companies might try using older, cheaper memory types to keep prices down, sacrificing performance.

China’s memory makers are growing fast and could help fill the gap. But they are also shifting some capacity to HBM, so pressure on regular memory will continue.

AI’s hunger for memory is only growing. New AI platforms will need even more chips. This means the memory crunch may last several years, keeping smartphone prices high.

The smartphone revolution that made powerful phones affordable worldwide is at a crossroads. The tech that once connected billions is now at risk of putting millions out of reach because of memory shortages driven by AI.