“For the past 15 years, the smartphone industry has relied on a single, reliable assumption: components will inevitably get cheaper. Despite the short-term volatility, the long-term trend toward lower memory and display costs allowed gadgets to improve performance every year without increasing in cost. But by 2026, this pattern has finally collapsed, helped by a sharp and unprecedented jump in RAM prices,” Pei notes.
The head of Nothing emphasizes that artificial intelligence has fundamentally changed demand. The same memory used in smartphones is now critical for AI-centric data centers. Major vendors are reserving capacity for years to come to fuel the boom around neural networks. The smartphone market has entered into fierce competition with AI infrastructure for the first time, leading to a surge in RAM prices.
In some cases, the cost of memory modules has tripled, but this may not be the limit as projected further growth in demand will affect availability. Memory is fast becoming one of the most expensive components of smartphones and potentially the biggest driver of component costs. As Pei points out, some memory modules that cost less than $20 a year ago could go up to $100 or more for top-end gadget models by the end of this year.
“The result is a structural shift that manifests itself as the complete opposite of everything we are used to in the industry. What was getting cheaper every year suddenly becomes much more expensive, because of which the very principle of smartphone production is fundamentally changing,” the top manager explained.
In his opinion, brands will now have to make a choice: either raise prices, in some cases by 30% or more, or reduce the technical characteristics of devices.
“The model of “more features for less money”, on which the policy of many brands focused on the price-performance ratio was based, is losing its sustainability in 2026. As a result, some segments, especially entry-level and mid-range, will shrink by 20% or more, and brands that have historically dominated these sectors will face serious difficulties,” suggested the head of Nothing.
At the same time, Carl Pei emphasized that the current situation provides his company with excellent opportunities for further development. Nothing, deprived of the advantages of giants, realized very early on that it would not be able to compete successfully in the market relying only on technical characteristics. Instead, the company focused on improving the user experience, proving that the look and feel of a smartphone is just as important. According to Carl Pei, 2026 will be the year when “the tech race is over” and the user experience will be the only real factor that provides a competitive advantage.
In late November 2025, Xiaomi president Lu Weibing warned of a significant increase in smartphone prices due to problems in the memory market. At that time, it was noted that the largest manufacturers reoriented their production capacity to corporate customers and reduced the production of chips used in “retail” gadgets.
Nothing, founded in 2020, is known for its smartphones with an unusual appearance with a transparent back panel, which have repeatedly won awards for design and innovative solutions. They are also known for their unique Glyth Interface technology – with diode strips on the back panel forming separate backlighting zones and patterns that serve as one of the ways to interact with the smartphone.
