Apple’s next iPhone range could arrive with a significantly higher price as a worldwide memory-chip shortage pushes up the cost of smartphones, computers and games consoles.
The pressure is being driven by the rapid expansion of artificial intelligence, which has redirected manufacturing capacity towards more profitable components used in data centres. Analysts expect the supply squeeze to continue through 2027 and into early 2028, with prices settling at levels far above those seen before the current crisis.
Apple is regarded as one of the companies best able to withstand the shock. Its enormous purchasing power gives it influence over suppliers, while its loyal customer base has traditionally tolerated premium prices. But the company has already increased prices for some Macs and iPads, and the iPhone is now being seen as the key test of whether so-called “chipflation” can be passed on to consumers.
The iPhone 18 Pro could start at $1,299 (£965), according to an estimate based on projected component costs. That would be $200 more than the starting price of the iPhone 17 Pro, although Apple has not confirmed the figure.
Apple is expected to launch the iPhone 18 Pro and Pro Max alongside its first foldable iPhone later this year, while the standard iPhone 18 and an updated Air model are expected to follow in spring 2027. That would leave the autumn launch focused on higher-priced devices, where Apple has more scope to protect its profit margins.
Why AI is driving the memory shortage
Memory is used in two main forms. DRAM temporarily stores the information needed when a phone opens an application or runs software, while NAND flash provides longer-term storage for photographs, files and other data.
AI data centres rely heavily on a specialised form of DRAM known as high-bandwidth memory, or HBM. It is made by stacking larger memory chips and connecting them in a way that allows huge amounts of data to move rapidly between processors.
HBM is harder to manufacture than conventional memory and requires substantially more silicon. Micron estimates that producing a given quantity of HBM consumes about three times as many wafers as making the same amount of standard DRAM.
That capacity is being bought by some of the world’s richest technology companies. Nvidia, AMD, Meta and Microsoft are prepared to pay more and sign long-term supply agreements, giving manufacturers a more predictable and lucrative market than consumer electronics.
“It’s not as simple as saying data centres are consuming RAM. The RAM is not the same,” said David Naranjo, associate director at Counterpoint.
AI is also increasing demand for conventional memory. Smartphone and computer makers are seeking to run smaller AI models directly on their devices, while newer software requires greater memory capacity than previous generations.
Song Hyun-jong, president of SK Hynix, said demand for both specialist AI memory and conventional memory was growing together as AI spread into search, coding and productivity services.
Only three companies dominate supply
The memory industry is unusually concentrated. Samsung, SK Hynix and Micron together account for about 90 per cent of the global market, leaving manufacturers of phones and computers dependent on a small number of suppliers.
Counterpoint estimates that Samsung held 39 per cent of the memory market in the second quarter of 2026, followed by SK Hynix on 26 per cent and Micron on 25 per cent.
Manufacturers had already identified the need for more production capacity before the AI boom. Improvements in chip design had enabled them to produce more memory from each silicon wafer for years, but those gains were becoming smaller and taking longer to achieve.
Micron concluded in 2021 that technology improvements alone would no longer be enough to meet long-term demand. It would have to process more wafers and build new factories.
Plans for expansion were then slowed by a downturn in the memory market. Demand for computers, tablets and phones surged during the pandemic, prompting manufacturers to increase production, but consumer spending later weakened and excess stock accumulated.
By the time the market recovered, demand from generative AI had grown far beyond manufacturers’ expectations.
Memory prices for smartphones rose by about 56 per cent in the first quarter of 2026 compared with the previous three months, and by a further 83 per cent in the second quarter, according to Counterpoint. The estimated cost of 16GB of smartphone DRAM rose from about $42 in the second quarter of 2025 to roughly $181 a year later.
Those figures do not necessarily represent the prices paid by Apple, which has greater negotiating power than most buyers. They do, however, illustrate the scale of the change facing the industry.
New factories will take years
Micron has begun work on a huge manufacturing complex near Syracuse in upstate New York. The project is expected to include 2.4 million square feet of cleanroom space, making it the largest semiconductor site in the United States by that measure.
The wider development will require between 15 million and 20 million square feet of buildings to house the water treatment, power, ventilation and other systems needed to operate the plant.
Micron does not expect meaningful production from the New York facility until 2030. Its Idaho plant is further advanced and is expected to begin producing wafers in mid-2027.
“We need to build more wafer capacity,” said Manish Bhatia, Micron’s president and chief operating officer. He said the challenge was now different from previous years, when advances in technology alone could keep pace with demand.
Micron is expected to spend more than $25 billion on capital investment this year, roughly twice as much as a year earlier. Even so, the company has said it cannot identify when supply will fully catch up because demand is continuing to rise rapidly.
Samsung and SK Hynix are also committing vast sums to new facilities. SK Hynix plans to invest 600 trillion won in its Yongin semiconductor cluster south of Seoul, while Samsung and SK Hynix are reported to be planning a combined 800 trillion won investment in four further factories in south-western South Korea.
China’s CXMT is expanding its own production capacity and Apple is testing its memory chips, although any commercial relationship would require approval from the US administration.
Counterpoint and technology research firm IDC expect the supply imbalance to ease in the best case by late 2027 or early 2028. But a slowdown in price rises would not necessarily mean cheaper devices.
“Not to say prices will come down to 2025 levels, but the price increases will stabilize at a new normal,” said Nabila Popal, a senior director at IDC. She said that new level could be “at least triple what they used to be”.
Consumers face higher prices or fewer choices
Manufacturers have several ways to respond to rising component costs: increase prices, reduce the amount of memory in devices, produce fewer units or concentrate on more expensive models with larger profit margins.
Microsoft has already increased the price of some Xbox consoles by between $100 and $150, leaving certain models as much as $300 more expensive than at launch. It has also raised prices for some Surface Pro laptops and tablets, while Meta added $100 to the price of its Quest 3 headset.
Apple’s scale and brand strength may allow it to raise prices without suffering the same level of damage as smaller rivals. It has gained market share in some markets by holding prices steady while cheaper competitors increased theirs.
Other smartphone and PC makers are cutting shipment expectations and shifting towards premium models equipped with OLED screens, larger memory configurations and additional AI functions that can justify higher prices.
That could mean the total value of devices sold remains stable, or even increases, while the number of units falls. The shortage is therefore not only making electronics more expensive; it is influencing which products manufacturers choose to build.
“2027 is pretty locked and loaded,” said Naranjo, referring to the supply commitments made by AI companies. “It’s not a happy ending anytime soon.”
