For decades, the price of computing power followed a predictable trajectory: every year, devices became faster, cheaper, and more accessible. In 1985, a top-tier IBM PC AT cost the equivalent of $19,400 today. By 2024, a basic smartphone sold for $30 in Nairobi and ran a processor billions of times faster. That arc of democratization has now snapped.
The cause is a seismic shift in the global memory industry. DRAM, the volatile memory that powers every computer and smartphone, is being redirected en masse to serve the insatiable demands of artificial intelligence. Three companies—Samsung, SK Hynix, and Micron—control over 90% of the world’s DRAM supply. They have collectively decided that serving AI data centers is far more profitable than supplying cheap phones.
The End of Cheap Memory
Producing DRAM is an extraordinarily capital‑intensive business. A single state‑of‑the‑art fabrication facility costs $15 to $20 billion and takes years to ramp up to competitive yields. The industry’s history is littered with giants that failed—Intel, Texas Instruments, IBM, Germany’s Qimonda, Japan’s Elpida. The survivors learned a brutal lesson: always maintain capital discipline and keep supply tight. That discipline paid off when AI emerged.
Training and running large language models requires high‑bandwidth memory (HBM), which stacks multiple DRAM dies vertically and connects them with thousands of microscopic channels. One gigabyte of HBM consumes more than three times the wafer area of a gigabyte of standard DRAM. In 2023, HBM accounted for just 2% of memory makers’ wafer output. By the end of 2026, it is expected to reach 20%. HBM margins run at 70% or higher, compared to 20–30% for commodity DRAM.
The memory makers did not expand overall production to absorb this new demand. Instead, they reallocated existing capacity. SK Hynix now directs 30% of its wafers to HBM. Micron went further: in December 2025, it shut down its consumer‑oriented Crucial brand entirely and stopped all shipments to the retail market. One of the world’s three DRAM suppliers simply walked away from consumer electronics.
The Fallout for Budget Smartphones
The result has been a staggering price explosion. Between the first quarter of 2025 and the first quarter of 2026, LPDDR4 prices rose 250%, LPDDR5 rose 220%, and desktop DDR5 prices in Germany surged 414%. Memory’s share of the bill of materials on a budget Android phone shot from around 15% to as much as 50%.
For manufacturers like Transsion, Oppo, Vivo, and Lava, the economics collapsed. Transsion, which held 48% of the African smartphone market and shipped 105 million phones in 2024, saw its net profit fall 54% in 2025. It slashed shipment targets by 40%. Oppo cut shipments by more than 20%, Vivo by nearly 15%. Xiaomi’s annual shipments dropped 19% year‑on‑year in early 2026.
The sub‑$100 smartphone—a lifeline for billions—is becoming permanently uneconomical. In India, that segment collapsed 59% year‑on‑year in the first quarter of 2026. In Africa, where 81% of shipments were under $200 in 2025, millions of consumers are being priced out of connectivity entirely. The technology that brought internet access to the world’s poorest is now disappearing from their hands.
Ripple Effects Across the Industry
The crisis is not confined to low‑cost markets. Samsung’s own consumer division could not secure a long‑term LPDDR agreement with Samsung’s memory division. The Galaxy S26 shipped with less memory than planned and at higher prices. Samsung executive warned the company would record its first‑ever annual net loss on smartphones.
Apple, which traditionally negotiated multi‑year contracts to smooth memory costs, saw its latest agreement expire in January 2026. Memory makers refused to offer anything longer than quarterly pricing. In February, Apple agreed to pay a 100% premium on LPDDR5X for the iPhone. The 12GB chips powering the iPhone 17 Pro increased in price by 230% over 2025. Apple delayed the iPhone 18 standard model to spring 2027 and pushed back the new Mac Studio from summer to autumn.
Laptop makers are also feeling the pinch. Dell raised prices by 15–20% in December 2025. The price increases are expected to cascade across the entire consumer electronics market.
Meanwhile, the memory makers have never been more profitable. In 2025, Samsung, SK Hynix, and Micron collectively earned $70 billion in profit. In 2026, that figure is projected to more than double. Samsung’s workers nearly went on strike over how to share those profits.
What Lies Ahead
The demand side shows no signs of easing. Nvidia’s Vera Rubin platform, launching in late 2026, will pair Rubin GPUs with Vera CPUs that consume enormous amounts of LPDDR. By 2027, Vera Rubin is projected to use more LPDDR than Apple and Samsung’s consumer divisions combined. Hyperscalers like Microsoft and Google are spending over 30% of their capital expenditure on DRAM alone. Their executives spent late 2025 “practically taking up permanent residence in Korea” to secure allocation.
The only near‑term relief may come from China. ChangXin Memory Technologies (CXMT) already commands over 30% of China’s LPDDR market and its DRAM has appeared in retail kits from Corsair. But even CXMT plans to convert about 20% of its capacity to HBM, because the margins are irresistible.
The era of ever‑cheaper, ever‑faster consumer electronics is over. The wealth generated by AI is accruing to three memory makers and the hyperscalers they serve. The cost is being paid first and most painfully by the world’s poor, but the rest of us are next. The democratization of computing has reversed, and there is no easy way to turn it back.