Mobile industry giants are struggling because of the thirst for memory chips
The nearly unlimited demand for AI memory chips has led to shortages worldwide. The shortage of goods pushed prices up so much that Apple had to warn consumers about price adjustments.
In an interview with the Wall Street Journal, Apple CEO Tim Cook said product price increases are inevitable. Cook added that the current state of the memory market will not be sustainable for long.
The impact of this crisis has become most evident in the low-cost phone segment, where profit margins are already very thin. The Nothing brand recently officially canceled the next generation CMF phone model, citing skyrocketing memory prices.
Nothing co-founder Akis Evangelidis shared on the Twitter platform that the company cannot make a phone at a reasonable price for the CMF brand in the current context.
According to calculations by Nothing's management, the cost of RAM at the present time is even more expensive than the processor and phone screen combined. That makes it impossible to maintain the old price level.
The component shortage stems from the fact that leading memory chip manufacturers such as Micron, SK Hynix and Samsung are prioritizing production capacity for high bandwidth memory (HBM) serving AI data centers.
According to a report from CNBC, when a supplier like Micron produces one HBM memory unit, it is forced to forgo the production of three conventional memory units for smartphones.
This trade-off causes the supply of components for mobile devices to be significantly tightened. Meanwhile, new factories take many years to come into operation. At the same time, most of the additional capacity will still be focused on the higher-margin HBM segment.
Even a giant with market power and long-term planning ability like Apple is not outside this spiral of influence. Analyst Ranjit Atwal from Gartner said the problem was beyond Apple's control.
Meanwhile, expert Francisco Jeronimo from IDC pointed out the paradox that the world is being disrupted by AI and users have to pay the bill for AI even before they actually use it. It is expected that the average selling price of smartphones will increase about 20% this year due to the scarcity of memory chips.
The future of the mobile market is facing grim choices as memory prices disrupt product plans. This situation is not just an isolated problem for Nothing or Apple, but a general pressure weighing on the entire mobile industry.