The price of flagship devices like the iPhone has crept upwards over the past few years, but the rising cost of components might mean more expensive budget phones are on the cards as well.
In a post on X earlier this month, Nothing CEO Carl Pei warned that 2026 “will be an unprecedented year for consumer electronics, and the smartphone industry in particular.”
He said that the growth of the smartphone industry over the prior fifteen years has been built on the assumption that complex components will decrease in cost over the long-term. However, in 2026, Pei asserts that this downward trend has been broken by a sharp surge in the cost of memory.
“AI has fundamentally reshaped demand. The same memory used in smartphones is now critical for AI data centres, as hyperscalers lock in silicon wafer capacity years in advance to fuel the AI boom. For the first time, smartphones are competing directly with AI infrastructure and memory prices are rising sharply as a result,” he said.
Citing estimates suggesting that memory modules “which cost less than $20 a year ago could exceed $100 by year's end,” Pei said that smartphone manufacturers like the one he heads up are now faced with the choice of downgrading specs or increasing prices.
“The 'more specs for less money' model that many value brands were built on is no longer sustainable in 2026. As a result, some markets, particularly entry and mid-tier segments, are likely to shrink by 20% or more, and brands that have historically dominated these segments will struggle.”
Pei revealed that Nothing itself would be looking to increase prices across its portfolio in the quarter to come, but added that this shifting supply chain situation could act as an opportunity for the company to play to its strengths.
“We learned early on that we couldn’t win on spec sheets alone; instead, we focused on perfecting the user experience, proving that how a phone looks and feels matters far more than its raw numbers,” he said.
Approached for comment on how the rising cost of components like memory might affect the local market, a Samsung Australia spokesperson told WhistleOut that rising memory semiconductor prices are a global challenge, and some level of impact across the broader industry is anticipated.
“Samsung remains relatively confident in its supply position, supported by long‑standing strategic partnerships built on trust, and will continue working to minimise any effect on consumers,” said the spokesperson.
OPPO Australia Managing Director Michael Tran told WhistleOut that rising component costs are something the entire industry is navigating, but added that these pressures are sharpening the company’s focus on value-led design.
“While the component landscape may shift, our commitment to quality, reliability and value remains unchanged,” he said.
Pushing back against the binary issued by Pei over social media, Tran argued that it isn’t as simple as a choice between higher prices or fewer features.
“Cost pressures are real, but innovation doesn’t stop and, in many cases, it drives smarter design and clearer prioritisation around what consumers value most,” he said.
Fergus Halliday
Digital Content Editor
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