The race to build AI infrastructure has gobbled up so much memory that prices have skyrocketed, with analysts predicting that product costs will rise as a result. But the outlook is far worse than anticipated. New reports and forecasts suggest that the RAM shortage could prompt manufacturers of cheaper devices to reduce or even stop production for some time.
Smartphone shipments are expected to drop by 13% through 2026 compared with last year, according to the International Data Corporation. This won’t just be a temporary crisis, but “a tsunami-like shock originating in the memory supply chain, with ripple effects spreading across the entire consumer electronics industry,” Francisco Jeronimo, vice president for Worldwide Client Devices at IDC, had previously said in a statement.
When reached at MWC 2026, Jeronimo predicted that this impact won’t happen immediately. Phone sales will stay pretty static over the first quarter of the year (which is almost over) as distributors buy as much stock as they can, but the shortage will start affecting phone production around the second quarter, between April and June.
Phones are already getting more expensive, as analysts predicted. The Samsung Galaxy S26 and S26 Plus, which both launched with a $100 price hike over their predecessors — though they also bumped the minimum storage to 256GB from 128GB. But the premium segment likely won’t be as affected as lower-cost, higher-volume phones, said Anshel Sag, principal analyst at Moor Insights and Strategy.
“That’s why you’re already seeing the Chinese [phone manufacturers] have to jack up prices already,” Sag said.
With the shortage, RAM prices are spiking, reaching three times last year’s levels, according to a Counterpoint Research report released at the end of February. The cheapest devices, already on thin margins, will likely see their profits evaporate. At that point, it’s not worth selling those phones.
“Some vendors are telling us that they are considering leaving that [budget] segment entirely, because if you sell a phone for $150, and half the cost is memory, where will you make money? There’s no point in selling products, right?” Jeronimo said.
If the cheapest budget segment drops out of the phone industry over the next year, that’s 10% of the global market that will be gone, Jeronimo noted.
The shortage is already affecting plans for the prices of phones set to launch. At MWC 2026, several phones were shown off without finalized prices, like the Unihertz Titan 2 Elite shown off at MWC that is soon being sold on Kickstarter. Before the RAM shortage, the price of an upcoming phone would be set weeks or months in advance of its release to store shelves. Now, it’s too risky to name a price until just before it’s sold. They just might not have enough memory to even supply the first batch of products at the preset price, Jeronimo said, and potentially raise prices thereafter.
As an example, the base Xiaomi 17 recently launched at 999 euros, but Jeronimo predicted that “the price they announced on stage is not the price they [will] see [the phone at]. The price in the store, in many operations, will be 100 euros more than what they said on stage,” he said.
The Samsung Galaxy S26 Ultra and the iPhone 17 Pro Max
When will the RAM crisis end?
Unlike last year’s tariffs and the financial fluctuations that phone-makers largely absorbed, the RAM shortage is unavoidable — there’s simply a lot less of these components to go around.
“This is not a short-term thing,” Jeronimo said. “You cannot build 1,000 factories in three or four months. [That would] take two to three years.”
At IDC’s current predictions, the crisis won’t last quite that long — only one and a half to two years, Jeronimo clarified. That could be shortened if other, smaller-tier suppliers start producing memory and alleviating the shortage, but the conditions he reported are dire, with RAM manufacturers requiring payment up-front for periodic shipments with the anticipation that the next slew of units could cost more.
But IDC’s analyst also put to bed another potential mitigation that had been floated late last year — that manufacturers would reverse their previous course of increasing RAM with each generation and actually trim it in the next. Even if it were cheaper to use less memory in phones, it would diminish the experience too much, causing too many retailers to return their phones for poor performance, Jeronimo explained. RAM isn’t just used to run AI models — it also lets people keep multiple apps open and operating at once.
On the component side, major companies aren’t commenting on the shortage and have even announced they won’t take questions on the matter at the start of press briefings.
Understandably, higher phone prices will likely lead people to hold off on upgrading, extending the time they keep their current handsets, said Dipanjan Chatterjee, vice president and principal analyst at Forrester. The onus is on the brands to counteract this upgrade lethargy in two ways, he said: diversify revenue streams to lean harder on non-phone sales, like Apple is doing with its services, and second, add more bells and whistles to make price increases more palatable.
Hence, Samsung is increasing the Galaxy S26 storage alongside its price hike. And Samsung itself is better positioned to capture sales with its tradition of strong deals and incentives during a product launch. When the Galaxy S26 lineup launched, it also offered trade-in and promotional deals to offset the $100 price increase, including pairing other gadgets with its phones.
While the RAM shortage is the biggest factor driving these price increases, other factors are at play as well. Global instability, including the recent war in the Middle East, is forcing transportation to be rerouted outside no-fly zones, raising the price of transporting products. Components across the board are getting pricier, too.
The good news is that this price spike won’t last forever. Eventually, the race to build more AI data centers will slow, and in addition to more memory fabrication spinning up, the prices will stabilize. But like every other consumer good that saw a price spike, they likely won’t drop in affordability to where they were before.
“I don’t think the price of memory will go down to the same levels as last year,” Jeronimo said.
