AI Worldwire

· Chips and Compute · 7 min read

AI Memory Shortage: Why Your Next Phone Costs More

Memory chips built for AI data centres are now squeezing the phones in people's pockets, and the latest company results suggest the squeeze is tightening.

The AI memory shortage is raising what consumers pay for phones, because the same three manufacturers that supply data centres also supply handsets. Micron, Samsung and SK hynix make more than 90% of the world's memory chips, according to Rest of World [4], and they have shifted supply towards AI customers.

Key takeaways

What happened

Micron reported fiscal fourth-quarter revenue of $54.23 billion on 30 September 2026, up about 379% from $11.32 billion a year earlier, and guided to $61.5 billion (plus or minus $1.5 billion) for the next quarter, according to its filing [1]. The Next Web, reporting on the earnings call, says chief executive Sanjay Mehrotra told analysts the company has no line of sight to supply and demand returning to balance [2]. Seoul Economic Daily reports Micron has contracted most of its 2027 HBM supply [5].

Samsung Electronics, in preliminary results reported by the Korea Times on 8 October 2026, estimated a record third-quarter operating profit of 107.4 trillion won (about $80 billion), with memory the main driver [8]. The same report says analysts expect its device division to post a second straight operating loss, as smartphone shipments fall [8].

In Japan, Kioxia reported record April to June revenue of ¥1.77 trillion on 3 August 2026, according to Blocks & Files, and said NAND flash demand is expected to exceed supply in 2027 [9]. The company also said smartphone NAND demand was flat and PC demand fell because of higher memory costs [9].

Why it matters

The cost shows up at the till. Nikkei Asia reported that Apple cut October orders for the iPhone 18 Pro and Pro Max by at least 15% from its original requests, citing people familiar with the matter [6][7]. Coverage differs on emphasis: the Nikkei headline blames soft demand, while The Next Web reads the report as saying memory-driven price rises are behind that weak demand [6][7]. The iPhone 18 Pro now starts at $1,199, $100 above its predecessor, according to Fortune citing Apple's website [10].

Why memory? An AI chip's speed depends on how fast it can read data, so accelerators use HBM, which stacks memory dies next to the processor. HBM competes with ordinary DRAM (dynamic random-access memory) for the same factory capacity. Samsung executive Kim Tae-woo said HBM will take close to 30% of industry DRAM wafer capacity in 2027, up from about 20% this year, according to Seoul Economic Daily [5].

TrendForce, in August, put DRAM and NAND at 47% of major cloud providers' capital spending in 2026, rising to 68% in 2027 [3]. It also said HBM contract prices could rise 70% to 140% in 2027 [3] and, per Seoul Economic Daily on 1 October 2026, projected that HBM average selling prices will rise 121% in 2027 [5].

Strengths and limits of the supply response

On the positive side, suppliers are adding capacity and signing long-term agreements, which TrendForce says can include price ceilings [3]. Micron plans about $25 billion of capital spending in the first half of its fiscal year, though The Next Web reports new clean rooms are planned for 2028, so relief is slow [2].

On the negative side, there is little slack. TrendForce expects memory contract prices to stay broadly elevated in 2027 [3], and Micron's comments point beyond that [2].

The global picture

United States. Apple is the most visible case. IDC forecasts 2026 smartphone shipments will fall 16.7% while average selling prices rise 27.6% to $581, according to Fortune [10]. Counterpoint puts US price rises lower, at 5% on existing models [4].

India. Counterpoint data in Rest of World shows India with the steepest increase among the regions it lists: 21%. Xiaomi's 128GB Redmi 15C went from ₹12,499 in December to ₹16,999 in June, according to the same report [4].

Middle East and Africa. Prices on existing models rose 18% in the region, per Counterpoint [4]. IDC data cited by Rest of World says sub-$100 phone shipments fell almost 60% year on year in the second quarter of 2026 [4].

China. Chinese makers account for about 60% of global smartphone shipments and have cut entry-level projects, according to Counterpoint's Ivan Lam, quoted by Rest of World [4]. Separately, Nikkei Asia reported in February 2026, citing unnamed sources, that CXMT and YMTC plan large memory expansions with output from 2027; neither company commented, and the report said US restrictions have cut CXMT off from some HBM supply [11]. We found no independent confirmation of the schedule.

South Korea and Japan. Samsung, SK hynix and Kioxia are the beneficiaries today, with record profits reported at Samsung and Kioxia [8][9], while Samsung's own device unit absorbs the cost.

What to watch next

Our take

The story is no longer "AI chips are expensive". It is that AI demand now sets the price of ordinary electronics. The cheapest phones look most exposed, since sub-$100 handsets have the least room to absorb cost, and the poorest buyers feel it first. We would treat the Apple order cut as reported, not confirmed, until a supplier or Apple comments.

FAQ

Why is AI making phones more expensive? Memory makers moved supply towards data-centre chips, leaving less for phones and raising costs, according to IDC as quoted by Rest of World [4].

Is the shortage ending soon? Micron's chief executive said on the 30 September 2026 call that he cannot see when supply and demand will balance, as reported by The Next Web [2].

What is HBM? High-bandwidth memory is stacked memory placed beside an AI processor to feed it data quickly.

Did Apple confirm the order cut? No. The figures come from Nikkei Asia's sources, and Apple did not respond to Fortune's request for comment [10].

This is analysis, not financial advice. AI Worldwire has no commercial relationship with the companies covered.

Sources

  1. Micron Technology, Form 8-K Exhibit 99.1, fiscal Q4 2026 results, SEC EDGAR, 30 September 2026.
  2. Micron sees the memory shortage tightening into 2028 after a record quarter, The Next Web, 2 October 2026.
  3. Memory Prices Soar; DRAM and NAND Flash to Account for 68% of Major CSP CapEx in 2027, TrendForce, 25 August 2026.
  4. How AI data centers are killing off the $100 smartphone, Rest of World, 5 October 2026 (cites Counterpoint, IDC, Omdia, S&P Global).
  5. HBM Prices to More Than Double Next Year as Shortage Persists, Seoul Economic Daily, 1 October 2026.
  6. Apple Shares Fall After News of iPhone 18 Pro Order Cuts, MacRumors, 9 October 2026 (relays Nikkei Asia).
  7. Apple reportedly cuts iPhone 18 Pro component orders by at least 15%, The Next Web, 9 October 2026 (relays Nikkei Asia). The original, Exclusive: Apple cuts iPhone 18 Pro orders due to soft demand, Nikkei Asia, 9 October 2026, could not be read directly by our research run.
  8. Samsung Electronics estimates $80.3 bil. in Q3 operating profit, Korea Times, 8 October 2026.
  9. Kioxia has a profitable yen for SSDs, Blocks & Files, 3 August 2026.
  10. A $100 price hike may be all it takes to scare off iPhone buyers, Fortune, 10 October 2026.
  11. China's CXMT and YMTC to massively expand memory output amid global crunch, KrASIA (republishing Nikkei Asia), 16 February 2026.

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