The global technology market is facing a critical juncture and a looming new economic challenge, as the unprecedented and voracious demand for AI and memory chips threatens direct and costly consequences for the average consumer. Market forecasts and analyses indicate a high probability of a renewed surge in smartphone and consumer electronics prices, according to serious warnings issued by major manufacturers and economic analysts.
Historical background: From a supply crisis to a specific demand crisis
To understand the depth of the current crisis, it's essential to revisit the technological landscape of the past few years. After the world gradually recovered from the semiconductor shortage that accompanied the COVID-19 pandemic and disrupted supply chains, the sector now faces a different kind of pressure. The previous crisis stemmed from factory shutdowns and shipping problems, while the current one is a result of a fundamental shift in manufacturing priorities. Since the advent of generative artificial intelligence and the emergence of massive language models like ChatGPT, major technology companies have engaged in a technological arms race demanding enormous computing power, thus reshaping the global chip industry.
Why is artificial intelligence eating up the mobile phone market share?
Modern AI servers require highly sophisticated components, including powerful processors, massive amounts of DRAM, and ultra-fast NAND flash memory for efficient data processing and storage. This enormous enterprise demand has led chip manufacturers to redirect their production lines to serve these high-margin, high-volume servers, at the expense of traditional consumer devices like phones and laptops, creating a shortage of supply for consumers.
Official warnings from industry leaders
In this context, industry leaders have sounded the alarm. Lu Weibing, chairman of the Chinese electronics giant Xiaomi, stated that the anticipated pressure on the memory chip supply chain in 2026 "will be far greater than what we are seeing this year." Weibing added that the inevitable result of this pressure will be felt directly by the public, saying, "Everyone will likely see a significant increase in retail prices for products." This bleak outlook aligns with the predictions of William Keating, chairman of the semiconductor consultancy Ingenuity, who confirmed the inevitable impact on the final prices of technology products.
Giants' Strategies: Profit First
Complicating matters further are the financial strategies employed by chip giants like South Korea's Samsung and SK Hynix, and the US's Micron and SanDisk. These companies are adopting a policy of "supply discipline," deliberately keeping inventory levels low to avoid any price drops that could erode their profit margins, especially after recovering from previous downturns. This delicate balance, coupled with the growing demand for artificial intelligence, puts smartphone manufacturers in a difficult position, forcing them to pass on rising production costs to consumers.
Expected economic impact on the consumer and the market
This surge in the cost of key components (DRAM and NAND) is expected to trigger a wave of "tech inflation," leaving smartphone manufacturers with two equally unpalatable options: either raise the prices of their flagship and mid-range devices, or reduce specifications in their budget models to maintain affordability. This situation could alter consumer behavior globally, leading them to hold onto their current devices for longer periods (resulting in lower refresh rates), which might slow the smartphone sales cycle in the medium term, at a time when chip manufacturers are reaping record revenues thanks to the AI boom.
