Nothing co-founder and CEO Carl Pei has warned that smartphone prices could continue rising through 2026 as memory costs serge amid growing demand from the artificial intelligence (AI) industry. The executive said the smartphone market is undergoing a major shift after years of benefiting from steadily declining component prices. According to Pei, manufacturers may soon face a choice between increasing prices and reducing specifications. He also suggested that consumers considering a smartphone upgrade could end up paying more if they postpone their purchase.
Nothing CEO Predicts Higher Smartphone Prices Amid Memory Shortage
In a series of posts on X, Pei said the smartphone industry has relied on a predictable trend for more than a decade, with memory and display costs generally falling over time. That allowed brands to improve hardware specifications without significantly raising prices. However, he believes that the model has now broken down due to sharp increases in memory costs.
He attributed the change to growing demand from AI data centres. According to the Nothing chief, major technology companies are securing memory and semiconductor production capacity years in advance to support AI workloads, reducing the supply available to smartphone manufacturers.
Memory is now the most expensive component in a smartphone. It’s more expensive than the processor, more expensive than the display, and can account for more than 50% of the total hardware bill.
For Phone (4a), memory costs doubled between when we decided to build the device and… https://t.co/4dJdSDwd6T
— Carl Pei (@getpeid) June 12, 2026
Memory prices have already increased by as much as 300 percent in some cases and could continue rising as demand outpaces supply, he said. The executive argued that memory is becoming one of the most expensive smartphone components and could account for more than 50 percent of a device’s hardware bill by the end of the year. He added that memory modules costing less than $20 (roughly Rs. 1,900) a year ago could exceed $100 (roughly Rs. 9,500) in premium smartphones by year-end.
The Nothing co-founder claimed memory now costs more than smartphone processors and displays. He cited the Nothing Phone 4a as an example, stating that memory costs doubled between the start of development and launch, then doubled again in the months that followed.
Rising component costs are forcing smartphone brands to make difficult decisions, according to the executive. Manufacturers may need to increase handset prices by 30 percent or more in some cases or reduce hardware specifications to maintain profitability. He also predicted that entry-level and mid-range smartphone segments could shrink by more than 20 percent as pricing pressure intensifies.
Nothing’s own products are unlikely to be insulated from these market conditions. The company expects pricing increases across its smartphone portfolio, particularly for devices that will transition to UFS 3.1 storage in the first quarter of next year.
The broader impact could extend beyond pricing. The executive argued that rising component costs may reshape how smartphone brands compete, placing greater emphasis on software, design, and overall user experience rather than on hardware specifications alone.
Recent market activity already appears to reflect some of these pressures. According to Pei, certain smartphones introduced since February have launched at up to $100 (roughly Rs. 9,500) pricier than their predecessors. In India, he claimed some models priced above Rs. 30,000 have seen price increases of more than Rs. 7,000 compared with earlier generations.
He also noted that smartphone makers cannot simply stockpile memory to avoid future shortages because supply is allocated by manufacturers. Consumers who delay upgrading their devices could therefore face higher prices in the coming months if memory costs continue to rise. Pei added that upcoming sale periods may not offer the same level of discounts as in previous years.
The latest comments build on earlier warnings from Pei about memory shortages and rising component costs. His recent posts suggest that the impact is already affecting smartphone pricing, with the trend potentially accelerating over the next year.
