Nothing CEO Carl Pei confirms smartphone prices will rise as AI drives memory costs up 3x

Nothing will raise smartphone prices in 2026 due to RAM shortages, Carl Pei confirms

2026 is looking like a tough year to be in the market for consumer electronics, as the race to dominate AI continues to devour more and more RAM. Unsurprisingly, Nothing isn't immune to these current market conditions, and it's bound to mean more expensive smartphones come later this year. Carl Pei, CEO and founder of Nothing, published a blog post to Twitter late on Tuesday. The post, titled "Why Your Next Smartphone Will Cost More," breaks down the current frustrations being faced by the tech industry, as AI "fundamentally reshape[s] demand" for memory. While most of the observations shared here are universal -- it's not just Nothing that appears to face a choice between raising prices or downgrading specs -- the real news comes towards the end of the post, when Pei confirms that Nothing's smartphone portfolio will "inevitably" see a price increase. It might not all be bad news for Nothing fans. Pei confirms an upcoming launch will see "some products" -- presumably Nothing's A-series -- move to UFS 3.1 storage, though that also ties into these upcoming higher prices. There aren't any exact figures here, though Pei does use seemingly-hypothetical guesses like "30% or more" when discussing unspecified smartphone brands. Earlier in the piece, Pei also points to estimates that "memory modules which cost less than $20 a year ago could exceed $100 by year-end for top-tier models." Again, not really suggesting minor $5 or $10 price bumps here. Still, Pei seems largely reassured by his own brand, calling the situation "a great opportunity" to prove to consumers that Nothing wins on more than "spec sheets alone." Although the Nothing experience has hit some pretty big speed bumps in the past few months, it's easy to see where this sense of optimism comes from. The company released some pretty solid products in 2025, even if each of them seemed to arrive with their own individual controversies. But Pei's big swing sets 2026 as "the year the 'specs race' ends," and I admittedly have a difficult time seeing that come to fruition. People are still looking for increasing amounts of power out of their smartphones, as we've seen with various Pixel 10-adjacent controversies over the past six months or so. Nothing's overall experience on Android is pretty solid, give or take a short-lived lockscreen ads experiment, but whether that's enough to see enthusiasts and other Android users give up on their race for the most portable powerhouse in their pocket remains to be seen.

Nothing CEO explains how and why you'll pay more for your phones this year

Smartphone price hikes have been widely predicted for months, but 2026 is now shaping up to be the year those warnings turn into reality. Analysts, leaks, and supply chain reports have all been pointing out how this year will be uniquely bold and worrisome for phone buyers. Now, Nothing CEO Carl Pei has laid out why smartphone prices are rising and why there may be no easy way around it. In a long post on X, Pei said the smartphone industry is facing a shift it has not seen in more than a decade, and it all comes down to memory. "For fifteen years, the smartphone industry relied on a single, reliable assumption: components would inevitably get cheaper," he wrote. That assumption, according to Pei, has finally collapsed due to a sharp and unprecedented rise in memory costs. Why memory is suddenly the biggest problem Pei explains that AI has completely reshaped demand for memory chips. The same memory used in smartphones is now critical for AI data centers, and hyperscalers are locking in silicon wafer capacity years in advance. "For the first time, smartphones are competing directly with AI infrastructure," he said, and RAM prices are climbing fast as a result. In some cases, Pei claims memory costs have already risen by up to three times, with more increases expected. He points out that memory modules that cost less than $20 a year ago could $100 by the end of 2026 for top-tier phones. That shift forces phone makers into an uncomfortable choice: either raise prices by 30% or more, or downgrade specs. Recommended Videos We are already seeing signs of this across the industry, from reports warning that your next Galaxy smartphone could cost more, to analysis showing how rising memory costs could directly impact your next smartphone purchase from any other brand. This is not just a smartphone problem. Any product that relies heavily on memory is affected. Laptops and PCs are already seeing price pressure, with reports showing RAM and storage prices climbing fast, and brands like Dell and Lenovo signaling upcoming price hikes, while Asus has also joined the growing list of PC makers raising prices. Even memory suppliers are sounding the alarm, with Micron confirming that the memory shortage and pricing pressure are here to stay. Due to AI race, the era of cheap phones may be ending, with entry-level and mid-range segments likely to shrink as costs climb. Pei agrees, saying brands that built their reputation on offering more specs for less money will struggle. Nothing itself plans to raise prices across its lineup, especially as it upgrades products launching this quarter to UFS 3.1 storage. Still, Pei sees an opportunity. He argues that 2026 marks the end of the specs race and the start of something else. With raw hardware no longer cheap, user experience, design, and how a phone feels to use will matter more than ever. In his words, the era of cheap silicon is over, and intentional design is just beginning.

RIP Budget Phones: Why 2026 Could Be a Nightmare for Your Wallet - Phandroid

Remember when you could grab a decent smartphone for under $300? Yeah, those days might be numbered. Budget phones in 2026 are facing an existential crisis, and Nothing CEO Carl Pei just explained why your next affordable smartphone might not be so affordable after all. Nothing CEO Carl Pei just dropped some uncomfortable truth bombs about the smartphone industry, and if he's right, budget phones in 2026 are going to be rough for anyone who doesn't want to drop serious cash on a phone. So, what's the issue? Turns out AI is eating the smartphone industry alive, and it's happening in a way nobody predicted. To give you some perspective, when Apple launched the first iPhone in 2007, it cost $499. Samsung's original Galaxy S debuted at $399 in 2010. Fast forward to today, and flagship phones routinely break the $1,000 barrier. We got used to that inflation at the high end, but budget phones remained accessible because component costs kept dropping. That safety net just disappeared. For fifteen years, the market operated on one reliable assumption: components get cheaper over time. Memory that cost $50 this year would cost $40 next year, allowing companies to pack better specs into phones without hiking prices. That predictable decline in component costs is what made smartphones under $500 possible in the first place. That model just broke. AI data centers are now competing directly with smartphones for the same memory chips. Companies are locking up silicon wafer capacity years in advance, and the result is brutal. According to Pei's commentary, memory costs have already jumped up to 3x in some cases, with more increases expected. Memory modules that cost less than $20 last year could hit $100 or more by year's end for flagship models. Let that sink in. A single component that used to be almost negligible is becoming the most expensive part of the phone. Smartphone makers now face an impossible choice: raise prices by 30% or more, or lower the specs. And as for the "more for less" value proposition that budget brands built their entire identity on? Yeah, that's no longer a thing. Pei predicts entry and mid-tier segments could shrink by 20% or more, with brands that dominated those categories struggling to survive. That means budget phones in 2026 will either cost significantly more or come with significantly worse specs. For Nothing, this is actually an opportunity. As Pei puts it in his statement, they never competed on specs alone because they couldn't afford to. Instead, they focused on design and user experience, proving that how a phone feels matters more than benchmark scores. Now that everyone else is being forced into that same reality, Nothing's approach suddenly makes a whole lot more sense. But it's not just memory. TSMC's 2nm manufacturing process is significantly more expensive than previous generations. The cost per wafer has jumped from around $18,000-$25,000 for 3nm to approximately $30,000 for 2nm. This breaks the usual pattern where each new chip generation gets cheaper to produce. According to reports, Apple's A20 chip for the iPhone 18 could cost around $280 per unit, roughly 80% more than the current A19. Qualcomm's Snapdragon chips and MediaTek's processors are expected to see similar price hikes. The 2nm process uses nanosheet Gate-All-Around transistors that boost density and cut power use, but they're much harder to manufacture at scale. Advanced chips are getting pricier to produce right as demand is exploding, creating a perfect storm for smartphone makers who were already dealing with razor-thin margins on budget and mid-range devices. This directly impacts what we can expect from budget phones in 2026. Then there's the geopolitical nightmare. The ongoing trade war between the US and China has thrown supply chains into chaos. US tariffs have forced companies to scramble for alternative supply routes with lower tariff exposure, and that is a costly process. Every time a company has to shift manufacturing or find new suppliers, costs go up. Manufacturing in the US isn't the easy solution some politicians make it sound like either. Building factories and scaling production to match China's capacity will take years and massive investment. Even if companies wanted to move everything stateside tomorrow, US labor costs are significantly higher than in Asia. Those costs get passed directly to consumers. All of this is happening at once, creating what might be the perfect storm for smartphone pricing. Nothing's own phones won't escape the price increases. The company confirmed pricing will rise across their portfolio, especially as they upgrade some Q1 launches to UFS 3.1 storage. The uncomfortable (and expensive) reality is this: 2026 might be the year budget phones as we know them cease to exist. Or at the very least, our definition of "budget" will change. If memory costs don't stabilize, manufacturing doesn't get cheaper, and geopolitical tensions keep supply chains in turmoil, the $300-500 category could get squeezed out entirely. Consumers will face an impossible choice between expensive flagships and genuinely compromised low-end devices with outdated specs. The era of cheap silicon is over. Welcome to the era where your phone costs as much as your laptop, and AI is the reason why. Well, AI and tariffs and trade wars and expensive manufacturing processes. Basically, everything that could go wrong for smartphone pricing is going wrong at exactly the same time. Budget phones in 2026 are shaping up to be a very different beast than what we're used to, and your wallet isn't going to like it.