Smartphones are set to become significantly more expensive, Nothing CEO Carl Pei warned on Friday, citing a sharp and unprecedented surge in memory costs that he said has fundamentally broken a 15-year assumption underpinning the industry.
In a post on X and an accompanying article, Pei said memory had become the single most expensive component in a smartphone — costlier than the processor and the display, and capable of accounting for more than 50 per cent of the total hardware bill.
Memory is now the most expensive component in a smartphone. It's more expensive than the processor, more expensive than the display, and can account for more than 50% of the total hardware bill.
— Carl Pei (@getpeid) June 12, 2026
For Phone (4a), memory costs doubled between when we decided to build the device and… https://t.co/4dJdSDwd6T
"Since February, new phones have been launching up to $100 more expensive than their predecessors. In India, phones above ₹30K have seen price jumps of ₹7,000 or more," he wrote.
Pei cited the AI boom as the structural driver behind the shift.
The same memory used in smartphones is now critical for AI data centres, with hyperscalers locking in silicon wafer capacity years in advance, leaving smartphone makers competing directly with AI infrastructure for supply, he said.
In some cases, memory costs have already risen by up to 3x, with further increases expected. Memory modules that cost less than $20 a year ago could exceed $100 by year-end for top-tier models, he warned.
The Nothing CEO drew on his own company's experience to illustrate the pace of change.
"For Phone (4a), memory costs doubled between when we decided to build the device and when it launched. They've doubled again since," he wrote, adding that the trend was "playing out faster than predicted."
For consumers hoping to time the market, Pei had blunt advice.
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"The natural instinct is to buy ahead. It doesn't work that way. In a shortage, memory is allocated, not bought. You get what you're given, at the current price... If you've been waiting to upgrade a device, the best time was yesterday. The next best time is now. This year's sale season won't have the discounts people are used to." he said.
Pei said brands now face a choice between raising prices by 30% or more, or downgrading specifications — adding that the "more specs for less money" model that many value brands were built on was no longer sustainable.
Entry and mid-tier smartphone segments could shrink by 20% or more as a result, he warned, with brands that have historically dominated those segments set to struggle.
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