Smartphone memory costs surge as AI boom drives global shortage

The rising costs of memory and storage are now directly impacting the smartphone market, and Xiaomi has revealed specific figures for the first time. According to company president Lu Weibing, the price of a popular configuration with 12GB of RAM and 512GB of storage has increased by approximately 1,500 yuan over the past year, equivalent to about $217. This isn't merely an increase but a dramatic surge, with the cost nearly quadrupling compared to 2025. Where such a memory package previously cost the manufacturer around $70, its current production cost now reaches about $280—a figure comparable to an entire budget smartphone.

The cause of this spike is attributed to a global shortage driven by the artificial intelligence boom. Data centers are aggressively purchasing DRAM and NAND flash memory, reducing the available supply for other sectors, including mobile devices. As a result, manufacturers face a choice: either raise prices or accept lower margins.

For now, Xiaomi is attempting to cushion the blow for consumers. The company has announced minor price increases for certain models in China, but it is absorbing the majority of the added costs itself. However, if market conditions do not improve, price hikes for smartphones in other regions appear to be only a matter of time.