Why the iPhone is about to get more expensive

Apple’s upcoming iPhone lineup is expected to carry higher prices, a direct result of surging memory costs that are rippling across the technology industry. The increase would mark the clearest evidence yet that the global shortage of RAM and flash storage has become unavoidable for consumer electronics makers. Industry analysts and executives say the crunch could take years to resolve, reversing a long trend of falling memory prices that kept devices affordable.

The root cause is a fundamental shift in how memory is manufactured and allocated. For decades, producers could expand output by packing more chips onto each silicon wafer, but that technical progress has slowed. Micron, one of the three dominant memory makers, concluded as far back as 2021 that technology alone would no longer meet long-term demand, according to its president and chief operating officer, Manish Bhatia. The company determined that manufacturers would need to build massive new fabrication facilities and process more wafers to keep up.

That expansion plan was interrupted when the memory market collapsed after a pandemic-era buying boom faded, leaving producers with excess inventory and losses. Just as demand recovered, generative artificial intelligence created an appetite for memory far greater than anyone anticipated. The shortage is compounded by the industry’s extreme concentration: Samsung, SK Hynix, and Micron control roughly 90 percent of the market, according to Counterpoint, with Samsung holding a 39 percent share in the second quarter of 2026, followed by SK Hynix at 26 percent and Micron at 25 percent.

Memory in phones and computers falls into two types: DRAM, which temporarily holds data for active tasks, and NAND flash, which stores files long-term. AI data centers depend heavily on a specialized form of DRAM called high-bandwidth memory, or HBM, which stacks chips to move data much faster. Producing HBM is more difficult and requires about three times as many wafers as conventional DRAM for the same output, per Micron’s estimates, making it far more profitable to sell to AI chipmakers and cloud giants.

Those deep-pocketed customers are willing to sign multiyear commitments, giving memory makers a stable revenue stream that they lack when forecasting phone or laptop sales. Samsung’s executive vice president of memory, Jaejune Kim, said the company has prioritized customers who can guarantee future demand. AI is also increasing demand for standard DRAM, as phone and PC makers add on-device AI features that need more sophisticated and larger amounts of conventional memory. SK Hynix president Song Hyun-jong noted a structural shift where both AI memory and traditional memory are growing together.

The financial results show where the incentives lie. SK Hynix posted a record 76 percent operating margin last quarter, up from 41 percent a year earlier, while Micron’s adjusted gross margin hit a record 85 percent. Samsung’s semiconductor profits jumped roughly 250-fold from the prior year. Although Micron and Samsung say they remain committed to conventional DRAM, the limited supply and lucrative long-term deals from AI customers have made it highly attractive to shift capacity toward HBM. For US consumers, that means higher prices at the checkout for iPhones and other devices, with no quick relief in sight as the industry races to build the new facilities needed to close the gap.

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