Nothing CEO Warns of Rising Smartphone Prices Due to Memory Costs
Nothing co-founder and CEO Carl Pei has issued a strong warning. Smartphone prices may keep climbing through 2026. The main reason is surging memory costs driven by huge demand from the AI industry.
After years of falling component prices, the smartphone market now faces a major shift. Manufacturers must soon choose between raising prices or cutting specifications. Pei also advised that consumers who delay upgrades could pay more later.
In a series of posts on X, Pei explained the change. For over a decade, the industry enjoyed steadily declining costs for memory and displays. This trend helped brands add better hardware without big price hikes. However, that reliable model has now broken down.
Pei pointed to growing AI data centre needs as the key driver. Major tech companies are booking memory and semiconductor capacity years ahead. As a result, less supply remains available for smartphone makers.
Memory prices have already jumped by up to 300 percent in some cases. They may rise further as demand outpaces supply. Moreover, memory has become one of the costliest parts in a smartphone. It could soon make up more than 50 percent of the total hardware cost by the end of the year.
For context, Pei noted that memory modules costing under $20 (about Rs. 1,900) a year ago could exceed $100 (roughly Rs. 9,500) in premium phones by year-end. In fact, memory now costs more than processors or displays in many devices.
He gave the Nothing Phone 4a as a clear example. Its memory costs doubled between the start of development and launch. Then they doubled again in the following months.
These rising costs are forcing tough decisions across the industry. Brands may need to increase handset prices by 30 percent or more. Alternatively, they might reduce hardware specifications to stay profitable. In addition, Pei predicted that entry-level and mid-range segments could shrink by over 20 percent.
Nothing itself will not escape these pressures. The company expects price increases across its lineup. This will especially affect devices switching to UFS 3.1 storage in early next year.
Beyond pricing, the changes could reshape competition. Brands will focus more on software, design, and user experience instead of raw hardware specs alone.
Recent launches already show these effects. Some smartphones released since February came with prices up to $100 (about Rs. 9,500) higher than previous models. In India, certain phones above Rs. 30,000 saw hikes of more than Rs. 7,000 compared to earlier versions.
Pei also explained why stockpiling memory is not a simple solution. Supply is tightly controlled by manufacturers. Therefore, consumers who wait to upgrade may face even higher prices in the coming months. Upcoming sales events might also offer smaller discounts than before.
These latest comments build on Pei’s earlier alerts about memory shortages. The trend is already hitting pricing hard. It may accelerate over the next year.