The soaring price of memory semiconductors, known as RAMageddon, has severely impacted the global smartphone market. A portmanteau of RAM and Armageddon, RAMageddon describes an uncontrollable surge in memory prices driven by booming artificial intelligence data center investments.
Global Smartphone Shipments Plunge and Retail Prices Rise
According to market researcher Counterpoint Research on the 13th, global smartphone shipments for the third quarter dropped by 20% compared to the same period last year. This marks the lowest level for a third quarter since 2012, primarily caused by soaring memory prices and component shortages. As smartphone manufacturers pass on production cost burdens to consumers, global retail prices have risen by roughly 20% this year.
Samsung Electronics raised the domestic release prices of its ‘Galaxy S26’ series seven months after launch on the 1st of this month. The base 256GB model increased by about 150,000 won from 1.254 million won to 1.4036 million won, while the Ultra 1TB model rose by approximately 270,000 won. Apple also priced its ‘iPhone 18 Pro’ series higher than its predecessor last month and raised domestic prices for the existing ‘iPhone 17’ series.
AI Server Demand Triggers Severe LPDDR5X Shortages
The direct catalyst for rising smartphone prices is the explosive demand for AI server memory. Semiconductor companies have increased production of High Bandwidth Memory (HBM) and server DRAM, tightening the supply of smartphone DRAM. Even low-power DRAM (LPDDR5X), predominantly used in smartphones, is being redirected to select AI servers, driving up costs. TrendForce forecasts a 8% to 13% quarter-on-quarter increase in smartphone DRAM prices for the third quarter. HSBC notes that rising cost burdens will intensify as manufacturers gradually deplete memory reserves acquired before price hikes.
Mid-to-Low-End Smartphone Market Faces the Brunt
The mid-to-low-end smartphone market has taken a direct hit from rising memory values. Low-cost phones feature thin profit margins, and their target consumer base is highly sensitive to price, making it difficult to pass manufacturing cost increases onto buyers. Raising prices dampens demand, while maintaining them deteriorates profitability.
In the third quarter, Xiaomi’s smartphone shipments plummeted by over 30% year-on-year, while Oppo and Vivo saw drops exceeding 20%. Conversely, Samsung Electronics limited its shipment decline to just 3%, buoyed by strong initial sales of the ‘Galaxy Zfold 8’ and stable component supplies for the ‘Galaxy A’ series.
Shift Toward Premium Devices and Refurbished Phones
Certain manufacturers, including Xiaomi, are cutting back on low-end device production to focus on high-end models. Consumers are also choosing to pay extra for premium phones, delay upgrades, or opt for refurbished devices. Counterpoint projects that annual shipments of smartphones under $200 will decrease by roughly 40% by 2030 compared to 2025, whereas premium phones will grow at an average annual rate of 7%.
For Samsung Electronics, rising memory prices act as a double-edged sword. While it serves as a boon for the Device Solutions (DS) semiconductor division, it introduces heavy cost pressures to the Device eXperience (DX) division overseeing smartphones, TVs, and home appliances. Securities brokerages estimate that the DX division’s operating losses widened further in the third quarter, with Hana Securities projecting a loss of 2.1 trillion won and Shinhan Securities estimating 1.8 trillion won.
