tech
AI is killing the cheap smartphone. The memory that powers your phone now goes to data centers instead.
Memory makers redirected wafers from phones to AI chips. LPDDR prices surged 250%. India’s sub-$100 phone market collapsed 59%.
TL;DR
- The smartphone market is facing its largest single-year decline, concentrated in the cheapest segment.
- Memory makers are redirecting DRAM production from consumer electronics to AI data centers due to higher profit margins in AI chips (HBM).
- This reallocation has caused a surge in LPDDR prices, making budget smartphones significantly more expensive and unprofitable to produce.
- The sub-$100 smartphone market has collapsed in regions like India, and the trend is expected to price out many consumers globally.
- The crisis is also affecting premium devices and laptops, with companies like Apple and Dell facing increased component costs and potential price hikes or product delays.
- The trend signifies a reversal of decades of decreasing costs and increasing power in consumer electronics, with the poorest consumers being affected first.