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-Carlsen Martin
The smartphone industry may be heading toward a new era of higher prices, according to Nothing co-founder and CEO Carl Pei. In a series of posts on X, Pei claimed that soaring memory costs, driven largely by the booming artificial intelligence (AI) sector, could push smartphone prices significantly higher through 2026.
For years, smartphone brands benefited from falling component costs, particularly for memory and displays. This allowed manufacturers to offer better specifications without dramatically increasing retail prices. However, Pei believes that trend has now come to an end.
Memory Costs Become a Major Concern
According to Pei, memory prices have surged by as much as 300 percent in some cases and could continue climbing as demand outstrips supply. He noted that memory is rapidly becoming one of the most expensive components inside a smartphone and may account for more than half of a device’s hardware cost by the end of this year.
The executive suggested that memory modules that cost less than $20 (around Rs. 1,900) a year ago could exceed $100 (roughly Rs. 9,500) in premium smartphones by year-end. He further claimed that memory now costs more than key components such as processors and displays.
As an example, Pei pointed to the Nothing Phone 4a, stating that memory costs doubled during the device’s development cycle and then doubled again within months of its launch.
AI Data Centres Driving Demand
Pei attributed the rising prices to the growing demand for memory and semiconductors from AI data centres. Major technology companies are reportedly securing production capacity years in advance to support AI workloads, leaving less supply available for smartphone manufacturers.
Memory is now the most expensive component in a smartphone. Its more expensive than the processor, more expensive than the display, and can account for more than 50% of the total hardware bill.
For Phone (4a), memory costs doubled between when we decided to build the device and… https://t.co/4dJdSDwd6T
— Carl Pei (@getpeid) June 12, 2026 “>
This supply crunch is creating challenges across the mobile industry. According to Pei, brands may be forced to either increase smartphone prices by 30 percent or more, or cut hardware specifications to maintain profit margins.
Impact on Smartphones Could Be Significant
The Nothing CEO also warned that the entry-level and mid-range smartphone segments could shrink by more than 20 percent if component costs continue to rise. Nothing itself is unlikely to be immune, with the company expecting price increases across parts of its smartphone lineup, especially models moving to UFS 3.1 storage next year.
Pei added that the industry may gradually shift its focus away from hardware specifications and place greater emphasis on software experiences, design, and ecosystem features.
He also cautioned consumers against delaying smartphone purchases, noting that memory supply is tightly controlled by manufacturers. As a result, future devices could become more expensive, while upcoming sale seasons may not offer the same aggressive discounts buyers have come to expect in recent years.
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