Could AI’s memory demands wipe out cheap cell phones?

Nothing (2a) A close-up shot of the bottom of the smartphone.

AI-driven shortages of key components, particularly memory and storage chips, are driving up prices for a variety of electronic devices, including DDR5 memory kits and PC solid-state drives (SSDs), as well as game consoles and consumer laptops. Will low-cost smartphones be next? According to Google Translate, they might be. my driver Report.

The site highlights the “continued explosive demand” to keep AI data centers supplied with memory chips, noting that DRAM prices are now significantly higher than they were just a few years ago (up 700% from 2022). This is putting pressure on downstream consumer electronics products, and as a result, it will be even harder to find a smartphone under 1,500 Chinese yuan next year, the site said.

Micron and SK Hynix dominate the DRAM industry, together accounting for 90% of global supply, according to the report. Both chipmakers are prioritizing wafer shipments to more profitable AI server customers. While this report is largely general, we’ve seen plenty of evidence that this is the case, most notably Micron’s decision to phase out its consumer-facing Crucial brand to focus on AI customers.

The report raises a number of alarm bells, including that AI companies will lock in long-term orders for memory and storage, further shrinking the supply of consumer products. The company says this will affect low-end smartphones that typically feature DDR4 chips.

Close-up top and side shots of Nothing Phone (2a).

It also states that “storage material costs” for entry-level mobile phones currently account for 60% of manufacturing costs. The translated report appears to be talking about both memory and storage, as it says that phone makers have effectively been forced to reduce the amount of memory in lower-end models and lean towards the used memory chip market.

We’ll have to wait and see what happens. We’re already seeing some worrying trends, such as Apple increasing the prices of some Mac and iPad devices, including the lower-end MacBook Neo, increasing the starting price from $599 to $699.

If you’re looking for a silver lining, it’s that there are plenty of low-cost smartphones readily available in the market. Here are some examples:

What constitutes a “budget” phone is partially subjective, but whether you draw the line at around $199 or up to around $599, there are plenty of options. We expect this situation to continue beyond 2027.

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