AI is Killing the Cheap Smartphone
The memory that powers your phone now goes to data centres instead.
Summary (TL;DR)
Memory makers redirected wafers from phones to AI chips, causing a surge in LPDDR prices (up to 250%) and collapsing the sub-$100 phone market in India by 59%. This shift is predicted to lead to a 13% decline in global smartphone shipments in 2026—the largest single-year drop ever.
The Shift in Memory Allocation
In the past, most DRAM went to smartphones and laptops. However, in recent years, AI emerged as a significant and profitable consumer of memory, leading to a reallocation towards AI data centres. Three companies—Samsung, SK Hynix, and Micron—produce over 90% of global DRAM.
Capital Discipline and Market Dynamics
These memory makers have learned from past boom-and-bust cycles, adopting capital discipline as their strategy. The increase in HBM (high-bandwidth memory) demand for AI models has led to a significant reallocation: by the end of 2026, HBM is expected to account for 20% of wafers, compared to just 2% in 2023.
Discontinuation of Consumer DRAM Production
In December 2025, Micron discontinued its consumer-oriented Crucial brand entirely, redirecting all production towards AI and enterprise markets. This move reflects the broader industry trend: memory makers are leaving the consumer market to focus on more profitable AI chip production.
Impact on Smartphone Markets
The consequences are severe for the cheapest end of the smartphone market, with a significant drop in shipments expected across Africa and the Middle East (over 20%). The overall global decline is projected at 13%.
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