Your next phone is about to be 50% more expensive because of AI
Buying a great phone for a budget-friendly price might soon seem like a foreign concept, as the rise of AI has caused the cost of new smartphones to increase by around 50%, with the impact felt most on lower-end devices.
Artificial intelligence has already had a noticeable impact on the cost of certain forms of hardware, with PC builders notably having a painful year thanks to skyrocketing RAM costs triggered by scarcity.
That same issue is now making its way to the world of smartphones, with Apple joining many of the biggest Android manufacturers in raising prices due to the growing cost of memory across the board.
As reported by gHacks, the cost of some entry-level phones has already increased by 50% with budget-conscious buyers expected to spend far more money for the same product, and this is paired with a notable decline in shipment numbers, with experts predicting a drop by 15% this year.
Why does this impact budget phones in particular?
Price hikes triggered by AI are especially bad for budget phones because of the already small profit margins manufacturers are running with to get these gadgets on the market at a great price.
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While some consumers are willing to spend extra to make sure they're getting the best specs from a flagship model, many people are more interested in simply finding the best price-to-performance ratio, with companies willing to make less money on single purchases to get more people into their ecosystem, resulting in larger cumulative profit.
With unavoidable spikes in memory costs, however, smartphone manufacturers see their already small profit margins completely eaten up at existing prices, causing the cost to go up for the consumer as a result.
What was once a $400 phone could now cost as much as $600 to compensate for the price of parts that are in heavy demand within the AI industry, and the expectation that phones also provide a platform for AI also requires manufacturers to provide the necessary hardware.
While the price of flagship phones is expected to move less as a result of these issues, outgoing Apple CEO Tim Cook has suggested that even they won't be immune, revealing this week that cost increases are "unavoidable" as memory valuations become "unsustainable."
Don't be surprised if this results in an eye-watering price tag for the impending iPhone 18 Pro and much-anticipated foldable iPhone Ultra, but it'll be more intriguing – and perhaps more frightening – to see what happens when Apple announces the iPhone 18e.
How long are price hikes expected to last?
Nobody truly knows when memory prices will start to return to 'normal' levels, and there's even a worrying expectation that they'll simply never be the same again as AI only looks to become more important in the near future.
Production will almost certainly increase as a necessity to satiate demand, but that will take time and the current tech food chain will still place a greater importance on supplying hardware to AI compared to consumer tech like smartphones or laptops.
Prices only seem to be going up as time goes on too, suggesting there's still more pain in the future — so you might find yourself at a crossroads where you either buy now to avoid further price hikes, or stick with what you've got for as long as possible.