We often think of smartphones as magical slabs of glass and metal, forgetting they are complex machines made of hundreds of components. One of them is RAM (Random Access Memory), which is one of the most important elements on any device that deals with data. However, the same component will soon be responsible for driving up the cost of your next phone.
The era of cheap, high-spec phones might be coming to an abrupt end as the world has been hit with a RAM crisis. It isn't just inflation, and it isn't just corporate greed. Here's a deeper dive into what is causing it, why AI is ironically to blame, and what you can do about it.
What is causing the RAM Crisis?
The rising RAM costs and the shortage are a classic case of supply and demand, but it goes deeper than that. The primary driver, of course, is Artificial Intelligence. Technology giants like OpenAI, Google and Meta have gone all in on generative AI, triggering an insatiable demand for computing power. However, these AI models don't just need a fast processor but also fast memory. This has led to a rush for HBM (High Bandwidth Memory).
And this is where the problem starts: producing HBM is difficult and inefficient. It involves a complex process that ends up consuming way too many silicon wafers compared to the standard DRAM, which is used in your phones. Combined with the great production shift, where manufacturers seem to have aggressively shifted their production lines away from cheap consumer RAM to high-margin HBM for AI servers.
The issue is eerily similar to the GPU crisis during the COVID-19 pandemic, where crypto miners bought up all the expensive, high-power GPUs, leaving consumers with empty shelves and inflated prices. Consider the AI companies as miners, and smartphone users are the ones left paying the premium. However, unlike GPUs, which aren't required for everyone, RAM is an essential component used in almost every smartphone, which may cause prolonged demand.
How AI features are working against you
There is a bitter irony at play here. Phone brands have shifted their marketing heavily to AI phones that run intelligent features directly on the device. To run these features smoothly, phones need more RAM, 12 GB being the new standard. And yet, the massive server-side AI that inspired these features is still vastly hogging the manufacturing capacity needed to build that RAM. So, the tech that makes your phone smarter is making it unaffordable.
This deadlock makes things difficult for consumers. The only solution to this seems like brands like SKHynix and Samsung need to scale their production lines to meet the demand, but the question is, do they want to? Besides, the consumers still have a good part to play in this market crunch, which we will explore later, but let's look at it from the perspective of manufacturers first. That's because it feels like a conspiracy, but it might not be. Or maybe it is?
Is the RAM crisis a conspiracy?
It might feel like one. This is because after the memory market downturn in 2023, there has ever since been a strong incentive to keep the supply tight. By not building new factories for consumer RAM and just converting the existing lines to manufacture HBM, chipmakers have created an environment of artificial scarcity. It's a correction that tends to tilt the power dynamic back in their favour.
We touched upon this topic deeply in our YouTube video, and how the stock prices of players like Micron, Samsung and SKHynix have shot up. Therefore, it's not exactly a conspiracy but a mixed bag and a win-win for these firms, since they are already paid handsomely by the AI firms. And now, due to market crunch, are being paid handsomely by smartphone manufacturers, passing the end bill to us consumers.
What does this mean for your next phone?
Well, the aftermath has already started impacting smartphones. Newly-launched devices are seeing a massive jump in pricing, while the prices of even the older phones are being bumped up. In the bill of materials spike, memory is now one of the most expensive components, only behind the processor and display, and it may soon surpass the cost of the latter.
The industry is reporting a price jump of a whopping 20% or 30%, which significantly adds to the Bill of Materials. This affects phones across all segments, and since manufacturers can't afford to lose money, they are not willing to absorb these costs. This is causing direct price hikes, where premium phones are rumoured to see a price bump of up to Rs 7,000. Another outcome that we are yet to see is spec shrinkflation.
To keep the price tag attractive, brands might cheap out on other components and reduce the amount of RAM offered to a bare minimum. However, this might be seen in budget phones because AI features are mostly the highlight of expensive phones, and they would need more RAM to justify their presence. Ironically, AI could be the reason for its own death because not everyone can or is willing to buy premium smartphones.
What you can do about it
So, what can you do about it? If you're in desperate need of a smartphone, DON'T WAIT. Inventory that is currently on shelves was likely manufactured under older pricing contracts. As new batches arrive and new models launch by the end of this year or in January 2026, the price hikes will be baked in. Buying now locks you in before the worst of the wave hits.
Besides, if your phone is fairly new, hold on to it. With brands like Samsung and Google offering seven years of OS updates, it's possible to hold on to your existing phone for years to come. Refurbish your phone, replace the battery instead of replacing your phone. Your processor is likely fast enough, as we've reached the performance saturation where it's impossible to tell the two phones apart in app opening times and day-to-day usage.
If it's already too late and the price has shot up, turn to the used market. Get older flagship phones that still offer top-tier performance for less than half the price of a new phone. This prevents giving in to the market crunch and helps immensely in slowing it down while you still get to experience a decent phone.
The bottom line is that the RAM crisis is a reminder that the smartphone industry doesn't exist in a vacuum. The global race for AI has casualties, and right now, the casualties are your next phones. Whether you upgrade today or hold onto your current device for another year, it's important to understand this shift, so you don't end up overpaying in a volatile market.
