Micron is emerging as a major beneficiary of escalating global memory shortages driven by AI workloads, even as consumer device costs rise.

Strong demand for memory from AI data centers is driving up smartphone and PC costs. On September 7, The Verge reported that demand for High Bandwidth Memory (HBM) and server DRAM continues to grow, prompting memory manufacturers to allocate limited production capacity toward higher-margin AI-related products with more stable order books.

According to Counterpoint’s DRAM revenue metrics, Samsung, SK Hynix (SKHY), and Micron Technology (MU) collectively control nearly 90% of the global market. As production capacity shifts toward AI applications, supply for consumer electronics has tightened. Citing Counterpoint data, The Verge noted that smartphone DRAM prices surged approximately 83% quarter-over-quarter in the second quarter of 2026.

While HBM used in AI servers and DRAM used in smartphones are distinct products, both compete for the same manufacturing resources. HBM is constructed by stacking multiple layers of DRAM chips, requiring significantly more complex fabrication and packaging processes. Micron Technology estimates that producing equivalent capacity in HBM consumes roughly three times the wafer input of conventional DRAM.

As AI customers secure large-volume orders for HBM and server DRAM, memory manufacturers face stronger incentives to reallocate capacity toward these high-margin products. This shift reduces the resources available for conventional DRAM, directly increasing procurement costs for smartphone and PC makers. Short-term supply-demand pressures are unlikely to ease significantly. TrendForce projects that DRAM demand growth will continue to outstrip supply through 2027, with HBM’s sustained capacity consumption serving as a primary driver of tightness. The outlook for NAND differs slightly; as new fabrication lines come online, the supply environment is expected to gradually stabilize beginning in the second half of 2027.

Escalating memory prices are fundamentally reshaping smartphone cost structures. Counterpoint data indicates that in the second quarter of 2026, DRAM and NAND combined represented approximately 40% of the bill of materials (BOM) for tracked flagship smartphones, with DRAM overtaking the system-on-chip (SoC) as the single most expensive component. Apple (AAPL) is not immune to these increases. Despite leveraging its massive procurement scale to maintain strong supply chain leverage, rising memory costs have already materially impacted the company. During the third quarter of fiscal 2026 earnings call, then-CEO Tim Cook disclosed that Apple’s memory expenses in the June quarter were substantially higher than in the prior quarter, with further increases anticipated in the September quarter. Concurrently, Apple CFO Kevan Parekh identified rising memory costs as the primary driver of sequential gross margin compression.

Apple has already adjusted pricing on select Mac and iPad models. Cook acknowledged the company was “reluctantly raising prices,” characterizing the current memory market as a “100-year flood” and noting that prices were climbing “exponentially.” Market focus now turns to the iPhone. The Verge suggests a price increase for the next-generation model is plausible. However, as of September 7, Apple has not announced official pricing for the new lineup, nor has it confirmed that iPhone costs will be adjusted to reflect memory inflation. It is clear that rising memory expenses have already strained Apple’s procurement costs and margins; whether—and to what extent—this pressure translates to higher retail prices will depend on Apple’s forthcoming guidance.

Smartphone and PC manufacturers beyond Apple have already begun implementing price adjustments. Around September 1, Huawei and Xiaomi increased prices on select smartphone models, with individual hikes reaching 1,000 yuan on certain devices. The PC sector saw similar moves; media reports indicate HP implemented a price adjustment of approximately 15% on August 28, while Lenovo and Asus revised pricing for select products around the same timeframe. While memory costs are not the sole catalyst for end-product price increases, the sustained escalation in DRAM and NAND pricing has undeniably intensified cost pressures across the hardware supply chain.

Looking ahead, IDC forecasts that global smartphone shipments will fall 16.7% year-over-year in 2026 to just over 1 billion units, representing the steepest annual decline on record. Conversely, the average selling price is projected to climb 27.6% year-over-year to $581. Despite the shipment contraction, rising prices are expected to expand the total global smartphone market value by 6.3% to $613 billion.

As device manufacturers absorb rising component costs, memory producers are capitalizing on elevated pricing, with Micron Technology emerging as a standout performer. Micron’s growth extends beyond HBM alone. AI infrastructure has driven expanded demand for both HBM and server DRAM, while constrained supply of traditional DRAM continues to support pricing power. The company’s NAND segment also posted substantial gains. According to TrendForce, Micron’s NAND revenue reached $11.85 billion in the second quarter of 2026, a 99.2% quarter-over-quarter increase. This performance ranked first in growth rate among the global top five vendors and propelled Micron to third place in overall market share.

Unlike previous memory cycles, which were predominantly driven by PC, smartphone, and traditional server demand, the current market landscape is heavily shaped by AI data center requirements and their disproportionate impact on capacity allocation. Nevertheless, memory remains a highly cyclical industry. Future pricing trajectories will likely be influenced by the rollout of new fabrication capacity, shifts in consumer electronics demand, and corporate inventory adjustments. While it remains unclear whether the next-generation iPhone will see retail price increases tied to memory inflation, the structural dynamics of the global memory market have undeniably shifted. AI-driven demand has reconfigured supply allocation, burdening smartphone manufacturers with higher procurement costs while positioning Micron as a primary beneficiary of the current market upcycle.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.

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