Phoney Problem

AI is making phones and computers more expensive

This is a strange time for smartphones. For almost 20 years, phones kept getting better every year. They became faster, took better photos, had bigger batteries, and offered more storage. Even though they became more expensive, you got much more for your money. Today, even a cheap phone is far better than the best phone from 2007. But in 2026, that trend is changing because of AI.

Companies building giant AI data centres need huge amounts of computer memory, called RAM. As they buy more and more RAM, prices have shot up. According to a Deloitte report, the price of DRAM, the most common type of RAM, doubled in the first three months of 2026 and may double again before the year ends. Only three big companies make most of the world’s RAM. Last year, one of them stopped making RAM for regular customers so it could sell more to AI companies, which are willing to pay almost any price.

This is making phones and computers cost more. At the start of the year, experts thought smartphone sales would fall by 2% because of higher prices. Now they think sales could drop by 6%. Instead of getting better phones for the same price, people are paying more for phones that perform just like last year’s models. Computers are also becoming more expensive because RAM now makes up a much bigger part of their cost. Even if the AI boom slows down, this problem won’t disappear quickly. Building new RAM factories costs billions of dollars and takes three to five years.

This is especially bad news for India and other developing countries. Many students and workers may not be able to afford the phones and computers they need. Others will keep using old devices for longer. That can make learning harder and reduce productivity at work.

India should learn two important lessons. First, we keep missing new opportunities in the chip industry. During the pandemic, the world ran short of simple chips used in cars and home appliances, but India wasn’t making them. Now India is finally getting ready to produce those chips. But AI has created a shortage of the more advanced chips used in phones and computers, and India still doesn’t make those. We should aim to build them too, along with chips made especially for AI.

Second, many older chips still work perfectly well. The problem is that newer operating systems need more memory and processing power, making older devices feel slow. India could create a lighter operating system that runs well on older hardware. That would help make affordable phones and computers for millions of people in developing countries. With its strong software industry, India has a good chance of doing this.

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