The prolonged memory supply shortage driven by increased demand for artificial intelligence (AI) is significantly raising production costs for smartphone manufacturers. The share of memory costs in the overall production cost of smartphones has surged to 40%, making price increases for premium smartphones launching in the second half of the year inevitable.
As prices for complete products, including PCs and laptops, as well as repair and after-service costs, continue to rise, the so-called 'memory shock' is spreading across the IT device sector.
According to market research firm Counterpoint Research, the share of memory costs for $800 smartphones has increased from about 14% in the first quarter of 2025 to nearly 40% recently. During the same period, the costs of memory semiconductors, including DRAM and NAND, have skyrocketed from approximately $63 to $291, more than quadrupling. Previously, costs for components like displays, cameras, and application processors (AP) were higher, but now memory semiconductors have become the largest cost item.
Premium smartphones are particularly affected by rising memory costs. The integration of large-capacity DRAM and storage devices is essential for enhanced AI functionalities, along with the latest APs and high-resolution cameras, making it difficult to absorb the increased costs. Notably, the foldable phones that Samsung and Apple are set to launch in the second half of this year are expected to be sensitive to fluctuations in memory prices due to their large organic light-emitting diode (OLED) panels, hinges, and high-capacity memory.
Apple is also facing increased production costs. Counterpoint Research estimates that the bill of materials (BOM) for Apple's upcoming flagship model, the iPhone 18 Pro Max, could rise by as much as $300 compared to its predecessor. This increase is attributed to the rising memory prices, the application of 2-nanometer process-based APs, and next-generation packaging technologies. As a result, Apple is reportedly considering price adjustments, particularly for high-capacity storage models.
Samsung Electronics has already begun adjusting smartphone prices. The company raised the price of the Galaxy S26 series, launched in February, by 99,000 won compared to the previous model, ending a price freeze that had been in place since 2023. Recently, the prices of the 512GB models of the Galaxy Z Fold and Flip 7, released last year, were also increased by 94,600 won each.
Consequently, the next-generation foldable phones from Samsung, set to be unveiled on July 22, are also expected to reflect the increased production costs in their pricing. In particular, while the base model of the Galaxy Z Fold 8 is likely to maintain its price to expand market reach, significant price increases are anticipated for the Ultra and high-capacity models. According to IT media reports, Samsung's new foldable phones are expected to see a price increase of at least 100 euros (approximately 17,000 won) in Europe compared to their predecessors.
An industry insider noted, "In the past, rising oil prices drove up costs across manufacturing sectors, but now memory has emerged as a new cost variable for IT products. Smartphone manufacturers are in a situation where they cannot absorb all the increased costs, and they will have no choice but to adjust selling prices to defend their profitability."
* This article has been translated by AI.
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