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The memory pricing crisis may only be getting started. Nvidia's move to use more low-power DDR memory could be bad news for smartphone makers and other consumer electronics vendors, according to Counterpoint Research.
The current chip shortage is mainly affecting budget phones that use LPDDR4. However, "the bigger risk on the horizon is with advanced memory as Nvidia's recent pivot to LPDDR means it is a customer on the scale of a major smartphone maker—a seismic shift for the supply chain which can’t easily absorb this scale of demand," says Counterpoint Research Director MS Hwang.
Following the 50% memory price increases we've already seen in 2025, Counterpoint expects that to rise another 30% in Q4 2025 and possibly 20% more early next year.
(Credit: Counterpoint)"We are talking here about big increases to smartphone [bill of materials]—upwards of 25% in the case of some models—across the key mid-to-high-end segments, eating into margins or affecting growth. It will probably be both," says Senior Analyst Ivan Lam.
The problems are due to increased GPU demand as major AI players build out their data centers. That's expected to trickle down to consumers, who face rising prices for GPUs, smartphones, laptops, and more. This could result in vendors cancelling some cheaper devices that don't make financial sense to release, or higher prices for more premium models.
"The industry now faces a volatile mix of constrained capacity and surging prices, which will force painful trade-offs for suppliers and manufacturers alike," according to Counterpoint, which also points to less-predictable factors like tariffs.
This also assumes the AI hype train keeps on rolling and is not a bubble.