Forget sales and discounts, Nothing CEO warns smartphones won't get cheaper even in 2027

Nothing CEO Carl Pei warns that rising memory costs, driven by AI demand, are making smartphones more expensive and could lead to further price hikes.

In Short

• Nothing CEO Carl Pei says memory has become the most expensive smartphone component
• It suppresses processors and displays
• Pei claims memory costs for the upcoming Phone 4a doubled before launch 

In the digital era, when the technological boom is unfolding before our eyes many of us expect that the era will make digital gadgets such as smartphones cheaper. But what really is happening on the ground is quite the opposite. Smartphones could become significantly more expensive over the coming months, according to Nothing CEO Carl Pei. He says ongoing soaring memory prices are already reshaping the economics of the industry.

In a recent post on X, Pi claimed that memory has become the most expensive component inside a smartphone, overtaking processors and displays, and in some cases accounting for more than half of a device's total hardware cost.

“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 per cent of the total hardware bill,” Pei wrote on X.

The executive also warned consumers not to expect sweet discounts during this year's festive sales season, arguing that the ongoing memory shortage is likely to keep prices up well into next year. His comments build on an earlier prediction made in January, when he said the smartphone industry was entering a period of unprecedented cost pressure driven largely by the growing demand for AI infrastructure.

Memory prices have doubled again, says Carl Pei

Talk of rising smartphone prices is nothing new, but Pei claims the situation has worsened much faster than expected. According to his latest post, memory costs for the upcoming Phone 4a doubled between the time Nothing approved the device and its launch. Since then, those costs have doubled again.

The executive argues that smartphone makers are no longer competing only with one another for components. Instead, they are also increasingly competing with AI companies that are building massive data centres, many of which are securing memory supply years in advance. As a result, smartphone brands have less control over component pricing and availability than they did in previous years.

Pei also pointed out that several smartphones launched since February have already arrived with price increases of up to $100 compared to their predecessors. In India, he says, devices priced above Rs 30,000 have seen hikes of Rs 7,000 or more.

“Phone prices are going up, and they'll keep going up into next year. Since February, new phones have been launching up to $100 more expensive than their predecessors. In India, phones above Rs 30,000 have seen price jumps of Rs 7,000 or more,” writes Pei.

Why the AI boom is affecting your next smartphone purchase

Back in January, Pei described 2026 as a turning point for the smartphone industry. For years, brands benefited from steadily falling component costs, allowing them to offer better specifications without significantly raising prices. According to him, that trend has now reversed.

The reason, Pei says, is the AI boom. The same memory chips used in smartphones are also essential for AI servers and data centres. As technology giants continue investing billions into AI infrastructure, demand for memory has surged, pushing prices sharply higher.

Pei believes the shift could force manufacturers into difficult decisions. Brands may have to either increase prices or reduce specifications to maintain profit margins. He also suggested that the long-running "specs race" could slow down as companies focus more on software, design, and overall user experience rather than simply offering more RAM and storage at lower prices.

While the full impact remains to be seen, Pei's latest warning suggests that consumers waiting for steep discounts or lower prices may be disappointed. If memory costs continue to rise at their current pace, the era of increasingly affordable smartphone upgrades could be coming to an end.

“If you've been waiting to upgrade a device, the best time was yesterday. The next best time is now. This year's sale season won't have the discounts people are used to,” Pei added.

- Ends