Phones might get pricier next year. Thank the AI boom (www.cnn.com)

The surge in demand for artificial intelligence has led to a notable increase in memory prices, significantly impacting smartphone production costs. Major manufacturers like Micron and Samsung are prioritizing AI-driven data center requirements over consumer electronics, resulting in a projected 30% rise in memory prices by Q4 2025, with an additional 20% increase anticipated early next year. This shift has the potential to make smartphones, particularly lower-margin models, 8% to 10% more expensive to produce, forcing manufacturers to consider price hikes on consumer devices. As companies like Meta, Microsoft, and Google expand their data center infrastructures, the smartphone market is expected to decline by 0.9% in 2026 due to memory shortages. Analysts predict that the average selling price of smartphones could rise to $465, marking a record high market value of $578.9 billion. While these challenges are reshaping pricing strategies, experts believe the supply chain may stabilize and bring prices back down toward the end of next year. The rapid shift in focus to AI demands underscores the semiconductor industry's struggle to adapt to unforeseen changes in supply and demand dynamics.