Nothing CEO Carl Pei says memory is now the costliest phone component, accounting for 50%+ of BOM in some models, and predicts phone prices will rise into 2027
With RAM getting more expensive, Carl Pei says holiday discounts probably won't be the same this year.
Context & Ripple Effects
Nothing has previously positioned itself around cost/performance trade-offs, including using a mid-range chipset in Phone (1), while also pursuing a more premium handset strategy. The company is now signaling a slower flagship cadence, with Phone 4 not planned for 2026.
The wider coverage ties this to an industry-wide memory-cost shock: forecasts call for lower 2026 smartphone shipments, with the sub-$400 segment especially exposed. Nothing’s decision not to release a new budget CMF phone this year shows the pressure is already affecting product plans, not just retail pricing.
First-order effects
- Nothing faces a materially higher bill of materials for memory-heavy models, limiting its ability to maintain prior pricing and holiday discount levels.
- Consumers shopping for new phones may see higher list prices or fewer promotions through 2027, while Nothing is avoiding a 2026 flagship launch rather than committing to an annual refresh.
Second-order effects
- Budget-phone makers are likely to face the sharpest trade-off between absorbing memory costs, raising prices, and delaying launches; Nothing’s paused CMF release is an early example in the coverage.
- Higher memory costs can shift competition away from aggressive price cuts and toward component choices, feature prioritization, and longer product cycles as OEMs protect margins.
Third-order effects
- If memory remains an outsized share of handset materials costs, the low-end smartphone market could contract or consolidate as vendors with less purchasing power struggle to sustain entry-level price points.
- The episode reinforces a longer-running shift from predictable annual price declines toward smartphones whose pricing and launch cadence are increasingly governed by volatile component supply.
The trend: Rising memory costs are turning component procurement into a central constraint on smartphone pricing, discounting, and especially budget-device roadmaps.