Why Your Next Phone Costs More: The Chipflation Squeeze Explained
Quick answer
High phone prices come from a global memory chip shortage. AI data centres are absorbing memory supply, so phone makers pay more for components and pass the cost on to you.
If your next upgrade feels painful, you are not imagining it. Phones are getting pricier even when they look identical to last year’s model. Analysts call it chipflation, and it is hitting phones, laptops and other devices alike.
Because memory is hidden inside the phone, a model can look unchanged while costing more. Buyers often notice only at the checkout.
What Is Chipflation and Why Does It Cause High Phone Prices?
Chipflation means device prices rising because components cost more, especially memory chips. Memory decides how fast apps run and how much a phone can store. Samsung, SK Hynix and Micron are moving capacity towards AI servers, which earn them far more than smartphone memory. Less supply for phones means higher costs. Qualcomm also warned customers of a double-digit chip price rise from 1 September, while Counterpoint estimates memory alone adds US$100 to US$150 to a flagship’s build cost.
- AI data centres Buy huge amounts of memory
- Memory shortage Less supply left for phones
- Costlier chips Makers pay more per component
- Pricier phones The cost reaches buyers
How the AI boom pushes up the price of your next phone
How Much Have Phone Prices Risen?
Counterpoint Research puts the global increase at about 15%, while another reading says retail prices are up 20% since January. Either way, it is steep. Apple’s iPhone 18 Pro starts at US$1,199 (about RM4,897), US$100 above last year’s model. Samsung raised the Galaxy S26 to US$899.99 (about RM3,675), also US$100 more, and even repriced models already on sale. Developing markets suffered most: India rose 21% and Asia Pacific 19%.
Flagship prices: 2025 vs 2026
| Model | 2025 model | 2026 model | Increase |
|---|---|---|---|
| Apple iPhone Pro | iPhone 17 Pro US$1,099about RM4,489 |
iPhone 18 Pro US$1,199about RM4,897 |
+US$100about +9% |
| Samsung Galaxy S | Galaxy S25 US$799.99about RM3,267 |
Galaxy S26 US$899.99about RM3,675 |
+US$100about +12.5% |
Smartphone price increases by region
The two global figures come from different reports and measure price changes in different ways.
If a new flagship is out of reach, a second-hand phone in Malaysia can give you flagship-level performance for much less.
Budget Buyers Face the Worst of High Phone Prices
An extra US$50 is easy to absorb on a US$1,000 phone, but not on a US$100 one. That is why models under 150 euros are hit hardest, with margins already thin. Brands are responding by phasing out entry-level models, trimming storage, RAM and cameras, and even reviving 4G-only handsets. Xiaomi, Oppo and Vivo lost the most shipments. The bigger worry is that truly affordable phones may gradually disappear, hurting lower-income households most.
What’s being cut from budget phones
| Spec | Before | Now |
|---|---|---|
| Storage | More storage options | Lower storage options |
| RAM | Standard RAM | Reduced RAM |
| Cameras | Fuller camera setup | Stripped-down cameras |
| Network | 5G at budget prices | 4G-only models returning in some budget segments |
| Choice | Wider range of entry-level models | Entry-level models phased out |
This card shows trends reported across budget phones, not the specs of one particular model.
With fewer specs for your money, comparing carefully matters more than ever. These smart ways to compare phones before you buy can help you get the most from a tight budget.
Will High Phone Prices Come Down Soon?
Unlikely. TrendForce forecasts smartphone memory prices rising another 10–20% in the fourth quarter. Analysts expect the shortage to tighten significantly from 2027, with production capacity booked through late 2028. Meanwhile, buyers are holding back: global shipments fell 20% in Q3 2026, the weakest third quarter since 2012.
Phone memory shortage outlook, 2026 to 2028
- Q3 2026 Shipments fall Global shipments down 20%, the weakest third quarter since 2012.
- Q4 2026 Memory costs rise again TrendForce forecasts smartphone memory prices up another 10–20%.
- 2027 Shortage tightens Analysts expect supply to tighten significantly.
- Late 2028 Capacity still booked Production capacity is expected to stay fully booked.
Reported Forecast
If your current phone is on its last legs, waiting may only cost you more. You can browse available phones before prices climb further.
How to Cope With High Phone Prices
- Keep your phone longer. Delaying an upgrade is the simplest saving.
- Consider refurbished. The second-hand market is growing as buyers avoid new prices.
- Prioritise storage and RAM. Pay for specs that extend a phone’s useful life, not cosmetic upgrades. Paying more for a durable phone can beat replacing a poor fit early.
- Buy early if you must. If your phone is failing, waiting may cost more as prices keep rising.
Should I upgrade now?
Tick everything that applies to your phone and budget.
Tick the statements that apply to you.
Quick FAQ
Why are phone prices so high in 2026?
A global memory shortage, driven by AI data centre demand, has raised component costs that brands now pass on to buyers.
Will phone prices drop in 2027?
Probably not. The shortage is forecast to tighten in 2027, so high phone prices may persist.
Final Thoughts
This is no longer a blip. It reflects how the AI boom is reshaping the electronics supply chain. Until memory supply catches up, smart buying habits are your best defence. Plan ahead, compare specs, and budget for upgrades earlier than you used to.
When you are ready to upgrade, you can browse brand-new phones and compare your options.