The smartphone market is entering a new cycle of price increases, and this time the main reason is not so much the manufacturers’ desire to increase margins as the sharp rise in memory costs. Since the beginning of the year, global retail prices for existing smartphone models have increased by an average of 15%, and new devices may be about 25% more expensive than their predecessors released last year.
In some cases, price increases have already reached 100%, as manufacturers are increasingly passing on the higher costs of NAND and DRAM to customers. This is especially noticeable in regions where the share of inexpensive models has traditionally been high. In India, the average cost of smartphones increased by 21%, in the Asia‑Pacific region by 19%, in the Middle East and Africa by 18%, and in Latin America by 16%.
Markets with a high share of premium devices and widespread carrier subsidies have proved more resilient. In China, the average smartphone price increased by 10%, in Europe by 7%, and in the US by only 5%. However, even there, pressure is gradually intensifying, primarily due to more expensive new models.
The rise in production costs is already changing the devices themselves. Manufacturers are reducing storage capacities, simplifying cameras, and in some cases placing greater emphasis on 4G models instead of 5G. Consumers are responding by keeping older smartphones for longer and increasingly choosing models with less storage. Demand is also shifting toward the secondary market, installment plans, and financing programs.
The situation is particularly interesting for Apple, as the iPhone still accounts for more than half of its revenue. The company is still largely holding prices steady for current models, although the cost of memory chips has increased roughly fourfold since the fourth quarter of last year. This means direct pressure on margins if the additional costs are not offset by savings on other components, service revenue, or more expensive configurations.
However, the iPhone 18 generation looks likely to be the point at which Apple starts passing more of the cost increases on to customers. Pro models may rise in price by more than $200 compared with last year’s devices, and the bank cites the rising cost of NAND and DRAM as one of the key factors.
At the same time, Apple is preparing an even more important test of its customers’ price tolerance — the first foldable iPhone. The device is expected to generate about $14 billion in revenue for the company in the fourth quarter alone. By the end of the year, Apple may ship 7-8 million units, and up to 20 million in the first full year.
For the company, this is not just about launching a new form factor, but also about testing how far the average selling price of the iPhone can be raised without significantly harming demand. At the same time, according to the assessments, Apple’s main problem right now is not finding buyers but ensuring a sufficient supply of components. A memory shortage could limit shipments precisely at the moment when interest in the new product is at its peak.
Competition is also adding pressure. Xiaomi is launching its 18 Fold just two days before Apple’s presentation, and Samsung has already achieved success with the Galaxy Z Fold8. This means that Apple is entering a market where foldable devices have ceased to be an experimental niche and are gradually becoming a full‑fledged premium segment.
For manufacturers, the current cycle is becoming a test of pricing power. Those companies that can pass on the rising cost of memory to customers without a significant drop in demand will maintain their margins and may even increase their average selling prices. The rest will have to choose between reduced profitability and lower sales volumes.
In this situation, Apple is in the strongest position thanks to its loyal audience and the high share of premium devices in its product mix, but the risk remains significant for the company as well. Apple’s presentation is scheduled for September 9, a busy week on the US economic calendar. With John Ternus now at the helm as CEO, the launch could take on even greater significance, either giving Apple stock a fresh boost and putting it among the market movers or sending shares lower.
Much will depend on how consumers respond to the higher prices. If the iPhone 18 and the first foldable iPhone see strong demand even after a noticeable price increase, the company will effectively prove that it is capable of using component inflation to further increase its average selling price. If buyers start postponing device upgrades, the smartphone market may face not only rising prices but also a new decline in sales volumes.
