Rising RAM costs could push iPhone prices higher

Expect your next iPhone upgrade to cost more. A global squeeze on memory chips — driven by surging demand from artificial intelligence and constrained manufacturing capacity — is raising the component bill for smartphones, and Apple appears poised to pass some of that increase on to customers.

Supply bottlenecks and AI hunger

The memory market is unusually concentrated: Counterpoint estimates Samsung, SK Hynix, and Micron together control about 90 percent of supply, with Samsung at roughly 39 percent, SK Hynix 26 percent, and Micron 25 percent. That small group must allocate limited wafer capacity between conventional DRAM used in phones and high-bandwidth memory (HBM) that AI data centers prize.

HBM is both harder to make and far more lucrative, because it stacks larger chips and consumes multiple wafers per unit. AI companies and chipmakers willing to lock in multiyear contracts have been able to secure capacity and higher margins, leaving less room for components that go into consumer devices.

The result: smartphone DRAM prices jumped sharply in 2026, according to Counterpoint — with quarter-to-quarter increases measured in the tens of percent. For example, a 16GB DRAM configuration for phones that cost about $42 in the second quarter of 2025 was estimated to cost roughly $181 by mid-2026, a roughly 300 percent increase in a year.

Why it won’t be fixed quickly

Expanding memory manufacturing is not a short-term fix. Building semiconductor fabs involves years of construction, complex cleanrooms and massive utility systems, and long equipment installs. Micron’s new upstate New York complex — one of the largest cleanroom projects planned in the US — still isn’t expected to produce meaningful output until around 2030, and another Micron site in Idaho is slated to begin wafer output in mid-2027.

Industry forecasts from Counterpoint and IDC suggest the imbalance will likely persist through 2027 and into early 2028 in the best-case scenarios. Meanwhile, memory makers are plowing enormous sums into capacity: SK Hynix has accelerated a major Yongin build, Samsung and SK Hynix plan hundreds of billions of won in new South Korean factories, and Micron has outlined multibillion-dollar investments in US facilities and equipment.

Because demand for memory continues to grow — both from AI infrastructure and from phone and PC makers that want more on-device AI capability — suppliers face a moving target. Micron’s president and COO, Manish Bhatia, told The Verge the industry needs to “build more wafer capacity,” underscoring how structural the problem has become.

What it means for devices and prices

Manufacturers have a few choices: absorb rising component costs, trim shipments, reduce memory in products, or push higher-priced models. Several companies have already raised retail prices citing memory inflation: Microsoft increased some Xbox and Surface prices, and Meta added $100 to the Quest 3 headset.

Apple has also signaled the strain. Executives have said memory costs have directly reduced margins, and Tim Cook described the spike in pricing as a “100-year flood.” Reports suggest Apple may concentrate new fall releases at the premium end of the lineup — a strategy that lets it protect margins even as component costs climb — and one estimate has the iPhone 18 Pro starting around $1,299, about $200 more than its predecessor.

For many phone makers, the shortage is already reshaping product plans: shipment forecasts are being trimmed while companies pivot toward higher-end configurations that can tolerate larger component bills. That shift could keep industry revenue from collapsing even as unit volumes soften.

Longer term, more capacity will arrive as new fabs come online, but the combination of heavy AI-driven demand and the lengthy timeline for new facilities means memory prices are likely to remain elevated relative to 2025 norms for years.