Smartphone Price Hikes Not Over Yet: "Memory Now Accounts for Half of Manufacturing Costs"

Memory Accounts for 43% of Cost in Budget Smartphones

"Surging Memory Prices Impact Manufacturing Costs"

Amid the recent sharp surge in memory semiconductor prices, an analysis has revealed that components such as RAM now account for nearly half of the manufacturing cost of smartphones. This is largely due to the soaring prices of memory semiconductors, driven by growing demand for high-bandwidth memory (HBM) used in artificial intelligence (AI) accelerators.

According to market research firm Counterpoint Research on March 11, in the first quarter of this year, DRAM and NAND flash prices jumped by 50% and 90%, respectively, compared to the previous quarter. DRAM is used as the main memory in IT devices such as smartphones, and the larger the DRAM capacity, the better the multitasking performance, allowing multiple tasks to be handled simultaneously. NAND flash, which serves as auxiliary storage, is responsible for providing storage space in smartphones.

The spike in memory prices is pushing up overall smartphone prices, but the impact is especially pronounced for lower-end models. Counterpoint Research estimates that for entry-level smartphones priced under $200 wholesale (based on 6GB LPDDR4X and 128GB eMMC), assuming other component prices remain constant, the total cost in the first quarter of this year will rise by about 25% compared to the previous quarter. In this case, memory costs account for as much as 43% of the smartphone’s bill of materials (BoM).

During the same period, for mid-range smartphones in the $400–600 range (based on 8GB LPDDR5X and 256GB UFS 4.0), DRAM and NAND costs represented 14% and 11% of the total component costs, respectively. However, in the second quarter, these figures are expected to rise to 20% and 16%. For premium and flagship models priced over $800 (based on 16GB LPDDR5X HKMG and 512GB UFS 4.1), the manufacturing cost is expected to increase by approximately $100–150 by the second quarter. In this scenario, DRAM will account for 23% of the total cost, and NAND flash for 18%.

Due to the effects of rising memory prices, major smartphone manufacturers have already raised, or signaled the possibility of raising, the retail prices of their key products. Samsung Electronics, for example, increased the domestic launch price of the Galaxy S26 series by 99,000 won to 209,000 won, depending on storage capacity, compared to the previous generation. The price hike was more substantial for models with larger storage capacities, reflecting the impact of higher NAND flash prices.

In particular, companies focused on selling mid- and low-priced smartphones are also unlikely to avoid price increases. This is because memory semiconductors are essential components for smartphones, and there are limited options for cutting costs elsewhere.

Shanghao Bai, Senior Analyst at Counterpoint Research, stated, "The sharp rise in memory prices is having a structural impact on smartphone component costs," adding, "In particular, companies that rely heavily on entry-level models to expand market share may face short-term loss risks."

Bai also predicted that smartphone price increases this year will reach $30 (about 44,000 won) for entry-level models, and $150–200 (about 220,000–290,000 won) for premium flagship models.

This content was produced with the assistance of AI translation services.