Your next budget-friendly smartphone could be more expensive. Prices for phones could realistically rise somewhere between October and December. The overall price increase can largely be attributed to memory chip costs, which are on the upswing. At present, manufacturers are experiencing heightened production costs. This essentially costs you more at the counter.
Market analyst TrendForce has identified an ongoing issue within the market. The supply of memory chips is continually declining. Memory chips are extremely important in completing general smartphone functions. Phone manufacturers are using memory chips both in budget phones and mid-range phones. The decline in the supply chain is creating extensive disruption.
Now, chip manufacturers are redirecting focus to meet memory needs of high-performance computing. Chip manufacturers were producing even more chips for AI data centers in October 2023. They classify these chips as high-bandwidth memory (HBM). HBM is a higher-speed version of traditional smartphone memory chips. AI server demand is expanding across the globe. At the same time, HBM is significantly more lucrative, which has amplified demand for HBM memory.
Smartphone manufacturers are urgently responding to the situation within the chip market cycle by engaging in advance purchasing of chips, while hoping to secure enough to satisfy their supply chain. In fairness, advance purchasing only makes the current market imbalance worse, leaving even fewer memory chip options.
This will, of course, mean a direct price increase for phones. It is expected that the cost of LPDDR4X memory chips will increase approximately over 10%, as these chips are relatively cheap for even the most affordable phones. The cost of NAND flash storage is expected to climb too, upwards of 5% to 10% this fall.
The Outcome for Consumers
Smartphone brands have two difficult choices. They can reduce device features to cut costs. Alternatively, they will pass the cost to you. This means budget phones will not stay so budget-friendly.
Also Read: This iPhone Sold Out in Minutes in China – But Flopped in America
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