Rising Chip Costs Drive Smartphone Price Hikes

Smartphone prices are expected to continue their upward trend, largely due to increasing chip costs. This is driven by a combination of factors, including a DRAM shortage and price hikes from chip designer Qualcomm.

DRAM Shortage Due to AI Demand

Memory chip manufacturers like Samsung, Micron, and SK Hynix are prioritizing the production of High-Bandwidth Memory (HBM) chips for AI data centers over DRAM chips used in smartphones. HBM chips offer higher profit margins, and demand for them is exceptionally high. This shift in production has led to a significant increase in DRAM prices. A 12GB LPDDR5X DRAM module, which cost an estimated $40 to $50 wholesale last year, now carries a wholesale price of $145.90 as of the second quarter of 2026. These increased costs are ultimately passed on to consumers.

Qualcomm's Price Hike

Adding to the pressure, Qualcomm implemented a price hike for its chipsets starting September 1st. The company had previously notified customers of this increase in July. Qualcomm CEO Cristiano Amon stated that the company is simply "passing through big cost increases that we have" and cannot absorb them.

Impact on iPhone 17 and 18 Series

The iPhone 17, iPhone 17 Pro, and iPhone 17 Pro Max utilize Qualcomm’s Snapdragon X80 5G modem. While the iPhone Air and iPhone 17e use Apple’s in-house C1X modem, Apple may resort to dual-sourcing for the iPhone 18 Pro and iPhone 18 Pro Max. The iPhone 18 Pro series outside the US is expected to use Apple's faster C2 in-house modem, although it lacks mmWave support. Consequently, US variants of the iPhone 18 Pro and iPhone 18 Pro Max will continue to feature the Snapdragon X80 5G modem to support mmWave frequencies.