Short answer: DRAM and NAND are the chips that make up your phone's RAM and storage. AI data centres now consume so much of the world's memory supply that prices have risen roughly 90 to 120 per cent since late 2025. Phone brands are responding by raising prices and cutting specifications — which is why a 2026 phone can cost more than its predecessor while offering less RAM.
The two chips at the centre of this
Your phone contains two kinds of memory, and people routinely confuse them.
RAM is working memory — the space your phone uses to hold apps you have open right now. It is built from DRAM, specifically a mobile variant called LPDDR. More RAM means more apps stay open in the background instead of reloading when you switch back to them.
Storage is where your photos, apps and files live permanently. It is built from NAND flash. This is the 128GB or 256GB number on the spec sheet.
Both are commodity components made by a handful of manufacturers. Both have become dramatically more expensive. And both are things you cannot upgrade later on a phone.
Why AI caused a phone problem
Training and running large AI models requires vast amounts of high-bandwidth memory and server DRAM. The companies building AI infrastructure are buying it in quantities the industry has never seen, and they are not price-sensitive in the way phone brands are.
Memory manufacturers responded rationally. Fabrication capacity is finite and takes years to expand, so they shifted output towards the customers paying the most. Reporting through 2026 has consistently described chipmakers prioritising AI clients over smartphone brands, because the margins are simply better.
The result is a squeeze that has nothing to do with phones and everything to do with phones. Handset makers are bidding for leftover capacity.
Why budget phones got hit hardest
This is the counterintuitive part. You would expect a component shortage to hurt expensive phones most. The opposite happened.
On a flagship, memory is a modest slice of a large bill of materials dominated by the processor, camera system and display. On a budget phone, memory can account for as much as 40 per cent of the total build cost.
So when memory prices roughly double, a ₹60,000 phone absorbs a manageable increase. A ₹12,000 phone does not have the margin to absorb anything. Its maker must raise the price, reduce the specification, or discontinue the model.
| Segment | Memory share of build cost | Effect |
|---|---|---|
| Budget | Up to ~40% | Sharp price rises, spec cuts, models withdrawn |
| Mid-range | Significant | Steady repricing, quieter RAM/storage reductions |
| Flagship | Smaller share | Increases absorbed more easily |
“Costs more and does less” is literal
Watch what brands do rather than what they say. When a manufacturer cannot raise a price without losing the segment, it protects the price point by changing the product.
That looks like a phone launching with 6GB of RAM where its predecessor had 8GB. Or a base variant starting at 128GB where last year's started at 256GB. Or a UFS storage standard quietly stepping down a generation. The price on the shelf holds steady, and the specification underneath it does not.
This is why comparing model numbers across years has stopped being reliable in 2026. A phone with the same name as last year's may be a materially different device.
How long does this last?
Longer than most buyers assume. IDC has indicated the memory shortage may continue to affect smartphones and PCs into 2027. Counterpoint Research has said memory prices may keep rising through 2026 and beyond.
Memory capacity cannot be added quickly — fabrication plants take years and billions to build, and manufacturers are cautious about expanding for demand that might soften. The shortage resolves when AI demand plateaus or new capacity comes online, and neither has a confirmed date.
What this means when you are actually buying
Three practical consequences.
Buy more storage than you think you need, once. You cannot add it later, and the next phone will make it more expensive, not less. This is the one area where stretching is defensible.
Compare specifications, not model names. The successor to the phone you liked may have less RAM than the one you liked.
Consider where the memory in your phone was bought. A renewed device contains RAM and storage purchased years ago, before the shortage. You are not paying today's component prices, because the component was already installed and already paid for. That is the structural reason a renewed flagship increasingly outcompetes a new mid-range phone at the same price — and it is why Premium Renewed iPhones with 100% battery health and an 18-month warranty look different in 2026 than they did in 2024.
Related reading
Why smartphone prices are rising in India · Should you buy now or wait? · Is a renewed iPhone worth it in India?
Frequently asked questions
What is the RAM price crisis?
A sharp global increase in DRAM and NAND memory chip prices, driven by AI data centre demand absorbing supply. Memory component prices have risen roughly 90 to 120 per cent since late 2025, raising the cost of building smartphones.
Why does AI make phones more expensive?
AI data centres consume large volumes of high-bandwidth memory and DRAM. Memory manufacturers have prioritised these higher-margin customers over smartphone brands, leaving handset makers competing for reduced supply at higher prices.
What is the difference between DRAM and NAND?
DRAM is used for RAM, the working memory that holds apps you have open. NAND flash is used for storage, where photos, apps and files are kept permanently. Both have risen sharply in price.
Why are budget phones more affected than flagships?
Memory can represent up to 40 per cent of a budget phone's manufacturing cost, versus a much smaller share on a flagship. Thin margins mean budget makers cannot absorb the increase, so they raise prices, cut specifications or discontinue models.
When will RAM prices come down?
No confirmed date. IDC has suggested the shortage may affect smartphones and PCs into 2027. New memory fabrication capacity takes years to build, so relief depends on AI demand easing or new supply arriving.
Should I buy more storage because of this?
Yes, if you can. Phone storage cannot be upgraded after purchase, and memory is expected to stay expensive, so buying sufficient storage once is generally better value than replacing the device sooner.
