Smartphone Production Under Siege As Memory Prices Continue To Soar
There's been a lot of attention paid to how rising memory chip costs are affecting PC parts, particularly DRAM and discrete graphics cards equipped with video RAM, but the situation has implications that extend well beyond the PC. One segment in particular that is feeling the squeeze is the smartphone market, and things are about to get worse, according to Trendforce.
The market research firm says soaring prices are set to "weigh heavily on global smartphone production" this year, with total output predicted to decline 10% compared to last year. And with rising memory prices showing no signs of easing up, the firm says the gap between higher retail prices and consumer price tolerance will continue to wide, which in turn will further dampen demand.
"Taking a mainstream 8GB + 256GB memory configuration as an example, estimated contract prices in 1Q26 have surged nearly 200% YoY—roughly tripling from the same period last year. Memory, which historically accounted for around 10–15% of a smartphone’s BOM, has now surged to 30–40%," Trendforce says.
What this ultimately means for consumers is higher prices for smartphones. According to Trendforce, this is "unavoidable" for many smartphone brands as they look to protect their margins. Alternatively, or perhaps in addition, we could see smartphone configurations with reduced specs to account for soaring memory prices.
The silver lining is that some of the bigger brands are better positioned to weather the storm. That includes Samsung, which is a major memory supplier. Its vertical integration has set it up to see a smaller production plan compared to some Chinese brands, though Trendforce still anticipates a drop in overall volumes.
"Apple, which shares the top market position, is comparatively better positioned to absorb higher memory costs due to its higher proportion of premium models. Its customer base also shows greater tolerance for price increases, providing partial support for production stability," Trendforce says.
It's worth noting that Apple is coming off a monster quarter in which it raked in $143.8 billion, driven by record iPhone sales. Overall iPhone sales contributed $85 billion to Apple's quarterly earnings, compared to $69.1 billion in the same three-month period from a year ago.
Where the sting in the smartphone sector will be felt the most from rising memory prices is with entry-level models. The market research firm cautions that price-sensitive markets leave little room to pass through higher production costs and are therefore more vulnerable to cost volatility. This mainly affects Chinese brands like Xiaomi, though it will be interesting to see how the situation plays out as a whole, based on Trendforce's latest report.
