AI memory demand drives 5x DRAM price surge, raising consumer electronics costs

Sept. 7 (Asia Today) -- Booming investment in artificial intelligence data centers is driving memory chip prices sharply higher, increasing costs for smartphones, personal computers and other consumer electronics.

Major manufacturers are responding by raising retail prices and adjusting product specifications as production capacity shifts toward high-bandwidth memory and server memory used in AI infrastructure.

Data from Counterpoint Research and overseas media reports indicate that DRAM prices have increased roughly fivefold over the past year.

Samsung Electronics, SK hynix and Micron have prioritized production of higher-value products such as high-bandwidth memory and server DRAM amid explosive AI data center demand, tightening the supply of conventional memory.

The Financial Times reported that electronics companies including Apple and Microsoft have responded to memory shortages by raising prices or reducing product specifications.

Consumers are already seeing the effects.

Counterpoint Research said the average retail price of smartphones sold worldwide this year is about 15% higher than last year.

Newly launched smartphones are an average 25% more expensive than comparable products released a year earlier, while more than 40% of models have undergone price increases.

Existing smartphone prices rose a more modest 5% in the United States and 7% in Europe, but increases are spreading through newly launched products.

The rising cost of memory has also reshaped the cost structure of finished devices.

Counterpoint said smartphone memory prices rose about 300% in the second quarter from a year earlier, pushing memory costs above application processor costs across every smartphone price category.

For low-cost smartphones with comparable specifications, component costs increased about 70% from a year earlier, with memory accounting for most of the increase.

Pressure is even greater on PCs and laptops, which typically contain larger amounts of memory.

TrendForce estimated that in the first quarter of 2025 the central processor, DRAM and solid-state drive accounted for about 45% of the bill of materials for a laptop costing about $900.

By the third quarter of this year, that share had climbed to 68%.

South Korean electronics makers have also raised prices.

LG Electronics increased prices on some 2026 Gram laptops as memory costs climbed.

The launch price of certain 16-inch Gram models rose from 3.14 million won ($2,330) to 3.54 million won ($2,630) as of April, an increase of about 13%.

Samsung Electronics raised prices for its Galaxy Book6 lineup by between 175,000 won ($130) and 900,000 won ($669), depending on specifications.

Similar changes are appearing in smartphones.

Samsung raised the U.S. price of some Galaxy Z Fold8 and Z Flip8 models unveiled in July by $100 compared with their predecessors.

Samsung is one of the largest beneficiaries of rising AI-related semiconductor demand through its memory business, but the same chip price increases are creating higher costs for its smartphone and PC divisions.

Manufacturers are also reducing storage capacity, simplifying camera configurations and increasing the share of 4G models in some markets.

In price-sensitive low-end markets, some manufacturers unable to absorb higher memory costs are reducing shipments altogether.

The changes could create opportunities for Samsung.

The company could maintain premium demand through its Galaxy S and Z series while strengthening midrange products such as the Galaxy A and Fan Edition lines to capture demand left by lower-cost competitors.

But a prolonged increase in memory prices would also pressure the profitability of Samsung's finished-device businesses.

Even if semiconductor earnings continue to improve, the company's smartphone and PC operations will face the challenge of determining how much of the higher cost can be absorbed through price increases and product adjustments.

-- Reported by Asia Today; translated by UPI

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