Is the AI boom destroying your next flagship phone’s value?

We usually expect technology to follow a pretty simple rule: over time, it gets better and cheaper. That rule is currently being broken. According to a new report, the smartphone industry is facing its most significant price hike in 26 years. The culprit is not general inflation or shipping costs, but a specific, aggressive shortage of RAM.

It turns out that the massive data centers powering the current AI boom are gobbling up memory supplies at an alarming rate, leaving very little for smartphone makers to fight over. The situation is reportedly so dire that companies are scrambling just to secure enough inventory to build their phones.

The most worrying part of this report involves Samsung. To prevent the price of the upcoming Galaxy S26 from exploding into the stratosphere, the company is rumored to be considering rolling back camera upgrades. Essentially, the cost of memory is so high that they may have to sacrifice optical performance just to keep the phone on store shelves at a price people can actually afford.

This puts manufacturers in a terrible position. To run the advanced on-device AI features they are marketing, they need to include more RAM in these phones. Yet, that very RAM is now the most expensive part of the bill of materials.

This matters because we are potentially entering a weird period of "tech shrinkflation." Usually, when a new phone launches, you pay the same price as last year for a faster chip, a brighter screen, and better cameras. But with AI demand squeezing the supply chain, that value proposition is disappearing. Apple, Google, and Xiaomi are all fishing in the same drying pond, meaning this is an industry-wide squeeze, not just a Samsung problem.

If you are a consumer holding onto an older device, waiting for the iPhone 18 or Galaxy S26 might actually backfire. You could end up paying significantly more for a device that offers marginal, if any, hardware improvements over the current generation.

Who should be worried about this? Anyone who prioritizes physical hardware—like zoom lenses, battery size, and build quality—over software tricks. If the BOM (Bill of Materials) cost is being eaten up by memory to support an AI assistant, other components have to get cheaper to balance the scale.

It also threatens to break the upgrade cycle entirely. If the Galaxy S26 costs $200 more than the Galaxy S25 but has a worse camera setup to accommodate AI memory, the incentive to upgrade evaporates. This is particularly rough for power users who look forward to annual improvements. Instead of catching up to the competition, manufacturers might just be trying to tread water without sinking their profit margins.

It is incredibly frustrating to watch the AI hype train potentially derail the actual hardware experience. We are reaching a tipping point where the "smart" features are cannibalizing the physical phone. From my perspective, if a manufacturer has to choose between adding expensive memory for an AI assistant I might not use and keeping a high-quality telephoto lens, I would take the lens every time. You can always update software later, but you cannot download a better camera sensor.

This situation makes the current generation of phones, specifically the Galaxy S25 series and the iPhone 17 lineup, look like incredible value propositions. They might be the last "uncompromised" flagships we see for a few years—devices built before the memory shortage truly crippled the supply chain.

So, would I buy a next-gen phone in this climate? I am skeptical. Unless the AI features are life-changing—and I mean truly revolutionary, not just a better way to summarize emails—I do not see the value in paying a premium for a device that technically has worse hardware than its predecessor. Rolling the dice on next year's models feels like a gamble where the house—and the memory suppliers—are the only ones winning.