Jakarta, INTI - Smartphone prices are predicted to rise starting this year, and electronics manufacturers are said to be at risk of bankruptcy due to the surging demand for memory driven by the artificial intelligence (AI) industry.
The CEO of Phison Electronics, Taiwan-based semiconductor company, Pua Khein-Seng, stated that soaring memory demand, particularly NAND Flash for AI applications, could potentially force electronics manufacturers out of business. “Many system vendors will go bankrupt or discontinue product lines due to memory shortages,” he said, as quoted by PC Gamer on Sunday, February 22, 2026.
NAND Flash is a type of non-volatile memory, meaning data is retained even when power is turned off. It is used for permanent data storage and forms the foundation of modern storage technologies such as SSDs, memory cards, and flash drives. Data is stored in cell structures such as SLC, MLC, TLC, and QLC, enabling high-capacity storage solutions.
The AI boom has sharply increased demand for chips and memory. SK Hynix, a South Korean memory manufacturer, estimates that supply shortages could persist through the end of 2027, suggesting the crisis may extend well beyond 2026.
Beyond tightening memory availability, electronics manufacturers are also facing stricter procurement requirements. Some memory factories are reportedly demanding upfront cash payments covering up to three years in advance from manufacturers seeking to secure production capacity.
Such schemes could heavily burden device makers operating on thin margins, particularly small and mid-sizes brands. Those unable to secure early supply agreements risk losing access to critical components such as NAND.
The impact could vary, ranging from reduced memory configuration options and higher end-product prices to the potential suspension of certain product lines.
Smartphone Prices Rise Due to AI
Limited chip and memory supply is also pushing prices upward. Samsung Electronics, for example, raised memory chip prices by 30% to 60% as of November 2025, according to sources cited by Reuters. Meanwhile, TrendForce reported that NAND Flash contract demand surged by 60% in November last year.
Meanwhile, technology focused market research firm Counterpoint Research projects that memory prices will rise by 30% in the fourth quarter of 2025 and could increase by another 20% in early 2026.
This situation is expected to affect both smartphone availability and pricing. Global smartphone production is estimated to decline by 200 million to 250 million units.
Telecommunications industry analysts predict the worst price hikes will occur in mid-2026, once new production contracts take effect, as reported by Red94 in December 12, 2025.
Manufacturers bound by long-term agreements negotiated before the supply shortage will begin to feel rising costs in the second and third quarters of 2026.
International Data Corporation (IDC) and Counterpoint Research have both warned that the average selling price of smartphones will increase significantly during the first half of this year.
The average selling price of smartphones is projected to climb to US$465 (approximately Rp 7.75 million at an exchange rate of Rp 16,680 per US$) in 2026, up from US$457 (around Rp 7.6 million) in 2025, according to IDC Senior Research Director Nabila Popal, as quoted by CNN in December.
Xiaomi President Lu Weibing emphasized that cost pressures on smartphone production will worsen next year. “I expect cost pressures to be much heavier next year compared to this year,” he said, as quoted by Qoo10 on November 24, 2025.
Francis Wong, Head of Global Product Marketing at Realme, stated that the semiconductor industry is accustomed to price fluctuations driven by emerging technologies. However, this time, the industry was not prepared for the speed and scale of AI-driven demand.
"In the semiconductor sector, there will always be mismatches (between supply and demand)," Wong said, as quoted by CNN on December 10. "This is somewhat unexpected."
According to 91Mobiles, Wong explained that the primary drivers of smartphone price increases in 2026 are rising costs of NAND Flash, DRAM, and SSD components, all integral to storage and memory in electronic devices.
DRAM (Dynamic Random Access Memory) is volatile memory, meaning data is lost when power is turned off. It serves as the main RAM in computers and servers, enabling rapid data processing. Meanwhile, SSD (Solid State Drive) is a storage device based on NAND Flash that replaces traditional hard disk drives, using controllers and NAND chips to deliver significantly faster performance.
These components are experiencing sustained price increases due to tightening supply and intensifying competition for chips amid the AI boom. The AI trend is driving demand for high-end memory. Components traditionally used in smartphones and laptops are now being prioritized for AI data centers, servers, and high-bandwidth computing.
Chip manufacturers have shifted capacity from standard gadget-grade DRAM and NAND to enterprise-grade memory such as HBM (High Bandwidth Memory). This transition is contributing to higher smartphone prices. “This is an industry-wide issue; no brand can avoid it,” Wong said, as quoted by 91Mobiles on November 27, 2025.
The situation is further exacerbated by ongoing trade tensions, supply chain realignments, and currency fluctuations. As countries tighten technology export regulations and diversify manufacturing hubs, production costs are rising alongside longer lead times.
Conclusion
The AI boom is reshaping the semiconductor landscape, but it is also creating significant ripple effects across the consumer electronics industry. As memory supply tightens and chipmakers prioritize AI-focused infrastructure, smartphone manufacturers face rising production costs, reduced output, and mounting financial pressure. With shortages expected to persist through 2027, higher smartphone prices may become the new normal rather than a temporary disruption.
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