Smartphone Memory and Storage Costs Drive Industry Change
Memory and storage have become the principal expense factors for the smartphone business because consumers now treat these elements as essential to their equipment. The growth of memory usage happens because on device AI and high fidelity gaming and complex imaging technology development require more memory than before.
Memory costs accounted for approximately 8% of component expenses which included flagship devices like the iPhone 12 Pro Max in 2020. The iPhone 17 Pro Max will achieve 10% of component expenses by 2025 according to current forecasts. Android flagship devices which contain 12GB to 16GB of LPDDR5X RAM and 1TB of UFS 4.0 storage are observing memory costs which equal or surpass 20% of their total Bill of Materials expenses.
External factors are increasing the prices of these products. The production capacity for mobile DRAM has decreased because memory suppliers are focusing their resources on manufacturing High Bandwidth Memory (HBM) and DDR5 products for data center operations. The supply limitation has resulted in price increases which create major challenges for low tier and mid tier markets.
The smartphone market faces a challenging period, with global shipments expected to decline by 6.1% in 2026. The SoC market will experience a decrease in shipments which will reach 7% from the previous year. The impact varies significantly across vendors
- Google Expected to see strong growth driven by AI differentiation and global expansion.
- Samsung Strengthening its position with the 2nm Exynos 2600 and a vertical supply chain strategy.
- Apple The integrated supply chain of Apple enables better cost control which helps the company succeed in the premium market segment.
- UNISOC The company experiences high pressure because it depends on the declining entry level 4G market segment.
- Qualcomm and MediaTek The companies experience mixed outcomes because their high end platform achievements balance out their lower cost segment declines.
Manufacturers are implementing survival strategies because memory supply constraints will continue to disrupt their operations. Entry level and mid range OEMs are reducing their product portfolios, lowering hardware specifications, or delaying new launches to manage costs. Some brands are testing cloud offloading solutions which enable them to decrease their need for high cost on device equipment.
Industry analysts do not expect a full market normalization until the second half of 2027 or early 2028. The competitive environment will establish itself through companies developing their SoC systems in house while controlling manufacturing expenditures and developing new products.
Source: counterpoint
