The lack of memory
The increased component prices threaten to knock out an entire product segment.
The AI boom has caused a shortage of especially memory chips for mobile phones, and with shortages come price increases. You have probably heard of that. During the spring, the manufacturers were a little cautious with price increases, perhaps they hoped that the trend would be short-lived, but this autumn we have seen large price increases. Not only was the new iPhone 18 Pro 1,500 kroner more expensive than the iPhone 17 Pro, the existing iPhone 17 also became 1,500 kroner more expensive overnight.
But then we are talking about the cheapest variants, with 256 GB of storage. If you want an iPhone 18 Pro with 1024 GB storage, it is suddenly SEK 4,000 more expensive than the iPhone 17 Pro.
It is thus clear that the storage space on the mobile phone has become a price driver. But wait, you might say now, it’s not the same as memory circuits, is it? The component shortage is a bit more complicated than that, the AI server halls don’t even use the same type of memory as mobile phones. It is rather that memory circuits and AI processors swallow a large part of the total production capacity, and storage memories are manufactured in the same type of factories as the circuits mobile phones need. Building new factories takes at least a year or so, and manufacturers also cannot be sure that demand will continue at this sky-high level. Therefore, several types of components for mobile phones have become drastically more expensive, and storage memory is clearly one of them.
Anyone who buys an iPhone 18 Pro with 1 TB of storage may still be used to not caring about the price tag. It is worse for the mobile phones that are supposed to compete precisely with the price. An eye-opener came the other day when Samsung launched its cheapest model, the Galaxy A18.
When the Samsung Galaxy A18 goes on sale shortly, it has a recommended price of SEK 3,290. A noticeable but not so dramatic jump in price compared to last year’s Galaxy A17 for SEK 2,790.
But it is with 128 GB of storage, if you want 256 GB of storage, the price tag suddenly becomes SEK 5190, SEK 1900 more! For that price, you can get a Galaxy A57 with the same storage from before the price increases, a significantly more capable mobile that we rather think of as a mid-range model.
Not all manufacturers follow this trend, for example Xiaomi has released its Redmi Note 17 series, where you typically pay 500 kroner more to get 512 GB of storage instead of 256 GB. Xiaomi may be taking chances that the component shortage is temporary, or they still have circuits in stock or an existing supply contract from before. If this continues, sooner or later even Xiaomi will have to raise prices.
The example of the Samsung Galaxy A17 shows in any case that the lack of components hits disproportionately against the cheaper models, and that the storage memory becomes a large part of the total component price. We’ve gotten used to even cheap mobiles having at least 128GB and often 256GB of storage, so it can be difficult for manufacturers to degrade them by reducing the amount of storage.
But the alternative is that the budget mobile phones will only be marginally cheaper than the mid-price models. And it’s bad news for those who want a mobile phone for SEK 3,000.