From London: As Australians woke this Tuesday morning, the world's largest mobile technology trade show was drawing to a close in Barcelona, and its defining conversation had little to do with folding screens or robot cameras. At Mobile World Congress 2026, the story that united phone makers large and small was a component most consumers have never thought much about: RAM.
The message from the show floor was consistent. Every manufacturer The Verge spoke to this week acknowledged the same painful reality: a global shortage of memory chips is forcing the industry toward a reckoning on price. Xiaomi, TCL, Light and others conceded that handset costs will rise, if they have not already.
Xiaomi launched its 17 and 17 Ultra in Europe this week at pricing that matched last year's models. But according to Angus Ng, the company's director of communications and public relations, holding that line required deliberate strategy.
"We can potentially go for bigger volumes, especially in the mid-range segment and entry-level segment, so then we can try to lower costs in that area,"Ng told The Verge. Pulling back on flagship specifications is not on the table. "We have to chase the latest and intend to showcase our best," he said. That approach buys time, but few in the industry believe it is sustainable.
The situation is considerably grimmer for smaller players. Kaiwei Tang, chief executive and co-founder of smartphone maker Light, described the supply dynamic in terms that will unsettle anyone who has ever bought shares on a volatile exchange. His manufacturer Foxconn told Light it could place orders for memory, but
"they don't tell you how much it costs until the day they ship. So it's like trading stock,"Tang told The Verge. Light can refuse delivery, but that simply means Foxconn turns to the next buyer in the queue. Tang said the company had already endured a "horrendous" year in 2025 because of tariff instability, and now faces another wave of uncertainty.
TCL's chief marketing officer for Europe, Stefan Streit, offered a note of grim solidarity. "It's not like somebody is excluded from it. Everybody has to deal with this difficult problem," he told The Verge. For consumers, that universality is cold comfort.
Why AI is starving your phone of memory
The shortage is not a manufacturing accident. Memory manufacturers are prioritising high-bandwidth memory for AI data centres, tightening supply of the DRAM and NAND components used in smartphones. The cloud giants powering generative AI tools are, in effect, outbidding phone makers for a finite global supply of chips. Memory prices are rising for consumer products because major manufacturers are ramping up production for AI data centres as artificial intelligence companies boom.
The financial scale of that competition is significant. DRAM price surges have already increased low-, mid- and high-end smartphone bill-of-materials costs by around 25%, 15% and 10%, respectively, according to Counterpoint Research, which expects further cost impacts of 10 to 15 per cent through the second quarter of 2026. IDC says that even when the DRAM shortage is resolved, memory prices are not expected to return to 2025 levels, so there could be a permanent shift toward higher-priced smartphones.
The impact is not distributed evenly. The most affected will be the low-end smartphone market, where base models are likely to return to 4GB in 2026. Budget handsets, which account for a substantial portion of Australian mobile upgrades, face the sharpest margin pressure. Counterpoint said that premium smartphones would be more resilient to this change, but the sub-$200 smartphone segment will see a 20% dip. Larger players with the purchasing power to lock in supply contracts early are far better placed. Cheap Android smartphones will be impacted most heavily by increasing DRAM costs, but Apple is well-positioned to avoid major impact because it focuses on more expensive, premium devices, and has more profit margin to work with and is better able to secure available DRAM supply.
A market heading for contraction
Smartphone makers are expected to ship 1.1 billion devices in 2026, down from 1.26 billion in 2025. IDC senior research director Nabila Popal has described the coming disruption in stark terms, calling it "a crisis like no other," predicting the smartphone market "will witness a seismic shift by the time this crisis is over, in size, average selling prices and competitive landscape," with no easing expected until mid-2027 at the earliest.
For Australian consumers, the practical implication is straightforward: the budget and mid-range Android phones that have driven upgrade cycles for years are about to get more expensive, potentially by a meaningful margin. Nothing co-founder Carl Pei warned that brands now face "a simple choice: raise prices by 30% or more in some cases, or downgrade specs," adding that "the 'more specs for less money' model that many value brands were built on is no longer sustainable in 2026."
There is a legitimate counter-argument to the most alarming forecasts. The smartphone industry has a history of absorbing component shocks more efficiently than analysts predict at the trough of the cycle. Manufacturers may find creative ways to reduce memory footprints through software optimisation, and the second-hand device market typically strengthens when new handset prices rise, giving cost-conscious buyers an alternative. Pricing volatility is also expected to drive the second-hand devices market up, which could soften the consumer impact overall.
For Canberra, the broader supply chain dimension deserves attention. The RAM crisis is a reminder that the global technology stack, from the AI services Australians use daily to the devices they use to access them, rests on a memory supply chain concentrated in East Asia. IDC expects the memory supply challenges to persist throughout 2026 and likely well into 2027. The transatlantic dimension matters too: the US and EU have aggressive chip manufacturing programmes, and this shortage highlights the strategic importance of domestically secured DRAM supply.
The MWC consensus in Barcelona this week is that there is no clean escape from this crunch. Prices will rise, specifications will be trimmed in some segments, and the industry's long-running promise of more performance for the same money is, at least for now, on hold. Whether governments in Canberra or Brussels can do anything meaningful to accelerate supply diversification is a question that the RAM crisis is forcing onto the policy agenda, even if the trade show floor in Barcelona is not where that conversation gets resolved.