Why the iPhone Is About to Get More Expensive as Memory Chip Prices Soar
A surge in memory chip prices, driven largely by AI's massive infrastructure demands, is pushing manufacturers including Apple toward higher device prices, with no relief expected for years.
Prices for the memory chips found in phones, computers and game consoles have risen sharply over the past year, and analysts warn the shortage could persist well into 2027 or 2028. According to market researcher Counterpoint, DRAM prices for smartphones rose roughly 83 percent in the second quarter of 2026 compared with the previous quarter, with the cost of a 16GB module more than tripling over the past year.
A crisis years in the making
While AI is widely blamed for the squeeze, the roots go back further. Micron executive Manish Bhatia told The Verge that as early as 2021 the industry realized technological improvements alone could no longer keep production in step with demand, meaning new factories would be required. But a pandemic-era slump in consumer spending forced manufacturers to scale back investment just before generative AI unleashed an unprecedented wave of demand.
Just three companies — Samsung, SK Hynix and Micron — control about 90 percent of the global memory market. High-bandwidth memory (HBM), used in AI data center processors, is harder to manufacture but far more profitable, prompting manufacturers to redirect capacity away from conventional consumer memory. Profit margins have soared as a result: SK Hynix posted a record 76 percent operating margin, while Micron's gross margin hit 85 percent.
New factories take years to build
Micron is currently constructing a massive facility near Syracuse, New York, expected to become the largest semiconductor manufacturing site in US history. Even so, meaningful output isn't expected before 2030. Other analysts, including Counterpoint and IDC, don't expect supply to catch up with demand until late 2027 or 2028 at the earliest.
Consumers are already feeling the impact. Microsoft has raised Xbox prices by as much as $300 total, and Meta added $100 to its Quest 3 headset. Apple, generally seen as best positioned to absorb such costs, has already raised prices on Macs and iPads, and is now expected to charge more for its upcoming iPhone 18 Pro and Pro Max lineup.
