AI-Driven Chip Shortages Could Make Your Next Smartphone Cost More

While there has been a lot of talk recently about AI usage raising power bills and power surges around the country that might be trigged by the proliferation of AI data centers across the country, there also appears to be another way that AI could end up affecting your finances. More specifically, the AI boom could have an impact on the cost of your next smartphone.

According to new reports, it sounds like AI-driven chip shortages are becoming a serious problem. And if the current trends continue, those chip shortages could lead to an increase in prices for the materials needed to create the chips that AI systems rely so heavily upon.

Of course, this isn't the first time that we've seen chip shortages spurring prices upward. We saw similar price rises after 2020, when Covid shutdowns caused chip production to slow down around the world. This resulted in a huge rise in the prices of graphics card and other components, as well as concerns surrounding smartphone price hikes.

Unfortunately, there's not much information on just how high prices might rise. Reports have indicated that both Samsung and Xiaomi appear to be looking at possibly raising the prices of their smartphones. Samsung's reasoning, according to a report from Hankyung, all comes down to the amount of memory required for many of the AI features that are so vital to the phone's operation. While many AI features can be run on the device directly, others require access to massive AI data centers, where the cloud can process the information that the AI programs need.

As for what is causing the shortages, it's the number of servers that are needed with high-bandwidth memory, or HBM. This type of memory is more expensive to manufacture than DRAM — which is used in RAM, which phones and other devices require. As such, it seems more manufacturers are focused on creating HBM over DRAM, which is leading to a shortage and rise in prices for the memory chips needed to power the actual consumer devices.

Those price changes are then being pushed onto the consumer, with Xiaomi telling Reuters specifically that the "cost pressure has transferred to the pricing of our new products" and that "rising costs of memory chips are far beyond expectations." Further, the report from Reuters notes that these prices could continue to rise, which could mean even more price hikes on phones in the future.