DRAM Shortage Could Push Budget Smartphones Toward Extinction by 2027 as AI Demand Explodes
The global DRAM supply crunch is shaping up to become one of the biggest challenges for the smartphone industry over the next few years. Industry observers warn that the situation could become especially difficult for affordable phones, with some analysts predicting that ultra-budget handsets may become far harder to find by 2027.
The main reason is the explosive growth of AI data centers. As artificial intelligence infrastructure expands worldwide, massive amounts of memory are being redirected toward high-performance computing systems. Some forecasts suggest that AI-related demand could consume more than 60 percent of available DRAM supply in the near future, leaving consumer electronics brands competing for a much smaller share.
That shift could have serious consequences for smartphone makers. DRAM and storage are essential components in every modern phone, and when supply tightens, prices rise quickly. Since 2022, DRAM prices are said to have climbed by as much as 700 percent, creating pressure across the entire electronics market.
The problem is made worse by the fact that the DRAM industry is highly concentrated. Samsung, SK hynix, and Micron reportedly control around 90 percent of the global DRAM supply. With only a few major producers dominating the market, smartphone companies have limited room to negotiate, especially when AI companies are willing to pay premium prices to secure memory for servers and data centers.
Budget smartphones could be hit the hardest. Devices priced around 1,500 yuan, or roughly $220, may become increasingly difficult to produce profitably if memory costs continue rising. Some analysts believe storage and memory could eventually account for around 60 percent of a smartphone’s total price. At that point, manufacturers would have few options: raise prices, reduce hardware specifications, or abandon some low-cost models entirely.
This could mark a major change for consumers who rely on affordable Android phones. In many markets, budget smartphones are the main way people access mobile apps, online payments, social media, education tools, and digital services. If entry-level models disappear or become significantly more expensive, buyers may be forced to pay more for devices with fewer upgrades than expected.
The pressure is not limited to smartphones. Research estimates suggest that global smartphone shipments could fall to their lowest level since 2013, while the PC market may also face a sharp decline. Higher component prices tend to slow replacement cycles, as consumers and businesses delay upgrades when devices become more expensive.
Chinese memory suppliers such as CXMT and YMTC may provide some relief, particularly for domestic brands including Huawei, Xiaomi, OPPO, and other local manufacturers. These companies could benefit from having access to alternative memory sources within China. However, using these suppliers on a wider global scale is more complicated due to geopolitical restrictions, trade concerns, and supply chain risks.
For companies like Apple and other global device makers, adding more memory suppliers could help reduce the risk of shortages, but it may not immediately lower prices. Analysts suggest that working with additional DRAM manufacturers would mainly improve supply stability rather than create major cost savings.
That means the top priority for smartphone brands may no longer be negotiating the cheapest possible memory prices. Instead, the focus could shift toward securing enough supply to keep production lines running. In a market where AI servers are absorbing more DRAM every year, having guaranteed access to memory may become more important than getting a discount.
The result could be a very different smartphone market by 2027. Budget phones may not vanish completely, but they could become more expensive, less feature-rich, or harder to find. Consumers may see fewer low-cost options, smaller storage capacities, reduced RAM configurations, or slower hardware improvements in entry-level models.
For now, the message from the industry is clear: high memory prices may not be a temporary problem. Some major PC and device makers have already suggested that elevated component costs could become the “new normal.” If that proves true, the era of extremely cheap smartphones with generous memory and storage may be coming to an end.
