AI boom driving smartphone prices up – GSMA

• High-speed memory designed for flagship smartphones and AI-driven applications cost more.
• This cost can be in part transferred to customers.

An illustration photo shows AI Agent displayed in a smartphone in Suqian City, Jiangsu Province, China on June 10, 2025. (Photo by Guo Dexin / CFoto / CFOTO via AFP)

The prices of smartphones could soon go high as a result of demand for memory and chipsets to power AI operations and data centres.

This is as phone manufacturers move towards high-speed, ultra-low-power memory chips to support storage, hold active apps, and support system processes and data.

According to the GSMA, the newest LPDDR5x Dynamic random-access memory (DRAM) chips are in high demand by smartphone companies and data centres. They are, however, more expensive than LPDDR4 chips, which have long been used by smartphone manufacturers.

In its State of Connectivity 2026, GSMA says modern high-speed memory designed for flagship smartphones and AI-driven applications cost more, hence this cost can be in part transferred to customers.

“Prices are increasing rapidly as demand grows for high-performance memory to power AI operations and data centres, including DDR5 memory used in flagship smartphones,” GSMA states.

The mobile communications industry leader argues that memory prices jumped by 80–90% in the second quarter of 2026.

During the release of the State of Connectivity report, Vivek Badrinath, Director General of the GSMA warned that increase in device prices would not only widen connectivity gap, but also increase AI divide.

“The greatest risk is not simply an AI divide between countries, but between people who can afford to participate in the digital economy and those who cannot,” said Badrinath.

“Unless we protect the affordability of entry-level smartphones, billions of people risk being excluded from the next generation of digital services before they have even had the opportunity to experience the internet,” he added.

This jump in memory prices would not only increase the prices of newer smartphones, but also other gadgets including personal computers fitted with modern, pricy chips.

Newer generation smartphones are already using modern chips to support AI features. Unveiled in September 9, 2026, Apple’s new iPhone Duo features powerful AI capabilities, and is driven by the new A20 Pro chip.

This, together with its dual 16-core Neural Engine, enables capabilities including on-device multitasking, machine learning and other intelligence features.

Samsung has also unveiled a fresh software rollout, overhauling its suite of Galaxy AI features. Its 2026 flagship, Galaxy S26 FE, runs on a 3nm Exynos 2500 chip, offering among other features, a context-aware Galaxy AI.

State of the chip market

Semiconductor chips are seen on a printed circuit board in this illustration picture taken February 17, 2023. REUTERS/Florence Lo/Illustration/File Photo

Recently, the global semiconductor market has faced disruptions due to boom in AI data center. This has not only led to raw material shortages, but also labor constraints that eventually lead to supply chain crisis.

In June 2026, leading device manufacturers, Apple and Microsoft, announced that they would hike the prices of some of their devices due to increasing demand for memory and storage chips.

As a result, Apple announced that the prices of certain MacBooks and iPads would go up by about $300 (approximately Ksh.38,853).

In a media statement, Apple noted that chip prices had not only increased significantly, but also quickly.

"We have shielded our customers from these increases so far, but we have now reached a point where we need to begin raising prices on several products, including today's increases for iPad and Mac,” Apple told CBS news publication.

The prices of chips are reported to have begun skyrocketing in June 2025. Technology companies have also reported memory chips to be their most expensive component.

This is as a results of price increases from chip suppliers like Samsung, SK Hynix, and Micron.

As a result of the soaring memory prices, experts also predict reduced shipments of electronic devices.