AI memory hunger triggers structural repricing of global consumer electronics
With Samsung, SK Hynix, and Micron prioritising AI data centre demand, budget device prices have surged, forcing major manufacturers to cut shipments and delay product launches.
A severe global shortage of dynamic random access memory (DRAM) is driving a structural repricing of consumer electronics, marking a sharp reversal of the long-term trend of decreasing hardware costs. The shortage stems from a massive reallocation of wafer capacity by major manufacturers Samsung, SK Hynix, and Micron, which have shifted production from low-power double data rate (LPDDR) and double data rate (DDR) memory to high-bandwidth memory (HBM) to meet surging demand from artificial intelligence data centres. This shift has left the consumer market with significantly reduced supply, causing component costs to spike and forcing a recalibration of pricing across the technology sector.
The impact is most acute in the budget smartphone segment, where prices for some models have surged from $50 to over $120. Transsion, a leading manufacturer of budget devices, reported a 54 per cent fall in net profit for 2025 and cut its annual shipment target by 40 per cent as price-sensitive consumers retreated from the market. The International Data Corporation (IDC) predicts a 13 per cent decline in worldwide smartphone shipments in 2026, with the downturn exceeding 20 per cent in Africa and the Middle East, where the sub-$100 segment has effectively collapsed.
Major technology firms are also facing elevated component costs, resulting in product delays and price hikes. Apple agreed to pay a 100 per cent premium on LPDDR5X memory in February 2026 after its long-term agreements expired, while Dell increased laptop prices by 15 to 20 per cent in late 2025. The memory share of the bill of materials for a budget Android phone has risen from approximately 15 per cent to as much as 50 per cent, fundamentally altering the economics of device manufacturing.
Memory manufacturers have adopted a disciplined approach to capacity, prioritising profitability over rapid expansion. SK Hynix saw its HBM revenue increase fourfold in 2024, accounting for over 40 per cent of its DRAM revenue by year-end. In December 2025, Micron discontinued its consumer-oriented Crucial brand and ceased all consumer shipments to redirect capacity entirely toward AI and enterprise markets. Samsung has similarly stressed its intention to prioritise long-term profitability, ensuring that wafer starts remain flat while HBM allocation grows.
Price volatility has been extreme, with LPDDR4 prices increasing by 250 per cent and LPDDR5 by 220 per cent between the first quarter of 2025 and the first quarter of 2026. DDR5 prices in Germany rose by 414 per cent over a similar period. With Nvidia’s upcoming Vera Rubin platform projected to consume more LPDDR in 2027 than Apple and Samsung combined, and Chinese maker ChangXin Memory Technologies planning to convert 20 per cent of its capacity to HBM, the pressure on consumer electronics supply is expected to persist.
