AI Boom to Drive Up Smartphone Prices.. Budget Phones Face a Major Hit!

Consumers planning to purchase a new smartphone may have to pay more, as prices are expected to increase further, particularly in the budget Android segment. According to leading global brokerage firm Jefferies, smartphone prices could rise significantly as demand for memory chips continues to surge due to growing investments in Artificial Intelligence (AI). The firm estimates that memory chip prices could increase by nearly 30 per cent. The rising demand for memory components is largely driven by data centres and AI infrastructure development, increasing production costs for smartphone manufacturers. Companies are likely to pass on these additional expenses to consumers. Jefferies also expects demand for memory chips from AI companies to remain strong in 2027, with the sector potentially accounting for around 60 per cent of total demand next year. The growing investment plans of AI companies are a major factor behind this trend, the report noted.

The impact of rising memory costs is expected to be particularly significant in the budget smartphone segment. According to the report, memory chip prices, which stood at around $20 in 2025, have now increased to approximately $60–65. Memory components account for nearly 60 per cent of the manufacturing cost of affordable smartphones, making this segment more vulnerable to price fluctuations. As a result, budget smartphone prices could increase by around 30 per cent. Manufacturers may pass on the additional production costs to buyers to protect their profit margins. Jefferies also pointed out that higher smartphone prices could lead consumers to postpone their purchases or consider refurbished devices as more affordable alternatives.