Taipei, Taiwan — Smartphone manufacturers are bracing for a significant increase in component costs, primarily due to a surge in demand for memory chips used in artificial intelligence applications. Industry analysts expect prices for low-power DRAM, specifically LPDDR5X, to rise sharply by 18 to 23 percent, surpassing earlier estimates of 8 to 13 percent.
The growing demand for high-bandwidth memory (HBM) has created a major supply crunch, straining production capabilities. As data centers expand their high-performance computing infrastructures, they are consuming HBM at unprecedented rates, diverting wafer production from consumer electronics. This shift has left smartphone-focused memory, like LPDDR5X, facing production cuts and steep price hikes.
Analysts at TrendForce emphasize this shift as a central factor contributing to a substantial “structural supply shortage.” With HBM dies being 35 to 45 percent larger than standard DRAM, the imbalance in capacity is putting pressure on other memory types crucial for smartphone manufacturing.
Adding to the concerns, the price of DDR5 memory is projected to continue climbing well into 2026, particularly in the first half of the year. While there may be slight decreases in HBM prices next year due to increasing competition and improved inventory levels, the profitability of DDR5 and LPDDR5X is set to outpace HBM3E by early 2026.
Xiaomi’s president, Lu Weibing, recently acknowledged on social media that the company is unable to alter the trajectory of global supply chains. He noted that the escalation of storage costs is exceeding initial forecasts and is expected to persist, reflecting deepening worries among smartphone manufacturers grappling with rising expenses.
The pressure is also tangible within the chip design sector. MediaTek is planning to transition to 2nm production technology at a time when wafer costs from foundry giant TSMC have reportedly reached around $30,000 each. As delivery times for DDR5 chips extend to between 26 and 39 weeks, the entire industry is faced with challenges in meeting demand.
LPDDR5X, a crucial component for smartphones, tablets, and ultrathin laptops, is at the forefront of these supply chain challenges. Major manufacturers such as Xiaomi and Samsung are contemplating price adjustments for their upcoming models in 2026 as they strive to offset soaring memory costs.
Industry experts warn that as costs rise, consumers may also feel the impact, potentially leading to higher prices for premium smartphone models. The intersection of escalating demand for AI computing and constrained supply in memory chips is reshaping the smartphone market landscape, leaving manufacturers and consumers alike to navigate this evolving scenario.