Phone prices are rising for a reason that many buyers may not expect. Nothing CEO Carl Pei says RAM and storage have become the biggest pressure point in smartphone production costs, and in some cases they now cost more than the chipset itself.
That shift matters because memory has traditionally been treated as a supporting component, not the most expensive one. Pei said RAM and storage can now account for more than 50 percent of a phone’s total bill of materials, which signals a major change in how handset makers build and price their devices.
Memory Costs Are Rising Fast
Pei said the increase has happened at a rapid pace over just a few months. When Nothing was developing the Nothing Phone (4a), memory component costs had already doubled, and after the device launched, they doubled again.
The result is a production environment where cost pressure does not stop at the development stage. It continues after launch, forcing manufacturers to deal with rising component bills even while products are already on the market.
Higher Device Prices Are Already Showing Up
The impact is now visible in retail pricing. According to Pei, many smartphones released since February 2026 have been priced about $100 higher than their predecessors.
Nothing is among the vendors that have already adjusted prices, and Pei warned that the trend could continue if memory costs keep climbing. For consumers, that means upgrades may become harder to justify if similar hardware now arrives with a noticeably higher entry price.
AI Demand Is Tightening Supply
Industry watchers have also pointed to a sharp rise in DRAM prices throughout 2026. The main driver is said to be surging demand for memory chips from the artificial intelligence sector.
As AI systems consume more of the available supply, less memory is left for other industries, including smartphones. That shortage leaves handset makers competing for allocations from suppliers instead of buying freely at stable prices.
Handset Makers Are Paying More for Allocation
In this market, vendors have fewer options when they try to secure RAM and storage for new models. They must compete for the memory supply that remains available, and that competition pushes purchase prices higher.
The higher component costs then flow into overall production budgets. DRAM price increases are said to add roughly 10 to 30 percent to smartphone manufacturing costs, depending on the device’s specifications.
That pressure is not the same across every model. Phones with larger RAM and storage configurations face greater cost exposure because memory makes up a larger share of their component mix.
Chipsets No Longer Hold the Top Spot
Pei’s remarks are notable because chipset costs have long been considered the main benchmark for smartphone pricing. The latest cost structure suggests that memory has now become more dominant in the materials budget.
For manufacturers, that makes pricing strategy more complicated. They must balance rising component costs against consumers who remain sensitive to final retail prices, especially in a market where upgrades are easy to delay.
Pei’s advice to buyers was direct: those planning to replace their phones may want to act sooner rather than later. Waiting longer could mean paying more, and it may also reduce access to the discount campaigns that manufacturers and retailers have traditionally used to attract buyers.
For now, the message from Nothing is clear. As long as AI demand keeps memory supply tight, smartphone makers may have to live with higher production costs, and customers may continue to see that pressure reflected in the price of new phones.
