Rising memory costs are beginning to ripple across the global smartphone supply chain. As end-market demand shows signs of slowing, leading chipmakers such as MediaTek and Qualcomm are reportedly scaling back their 4nm wafer starts to better align with market conditions.
Industry sources indicate that MediaTek has reduced its wafer input at foundries by approximately 15% year-over-year. Qualcomm is said to be taking a similar approach, reflecting a broader shift toward cautious production planning among SoC vendors.
Memory rrice surge drives up device costs
A key driver behind this adjustment is the sharp increase in memory prices. In the first quarter, DRAM and NAND quotes were reported to be up to four times higher than a year earlier, significantly impacting smartphone production costs.
For instance, a typical device with 12GB RAM and 256GB storage may now cost around NT$3,000 more to produce compared to last year. This puts smartphone brands in a difficult position: either pass the cost on to consumers through higher prices or limit hardware upgrades, both of which could dampen demand.
In the entry-level segment, memory components can account for up to 43% of the total bill of materials, even exceeding the cost of the main SoC. This shift is forcing vendors to rethink their product strategies, particularly in cost-sensitive segments.
Mid-Range and budget segments hit hardest
The impact of rising costs is most pronounced in the mid-range and entry-level smartphone segments, where margins are already tight. Meanwhile, premium devices priced above $600 remain relatively more resilient due to stronger pricing power.
However, the overall market outlook remains subdued, as both cost pressures and weakening demand continue to weigh on growth.
Technology transition and industry testructuring
Looking ahead, the transition to 2nm process nodes is expected to further increase production costs. As a result, competition is shifting beyond raw chip performance toward ecosystem integration and end-to-end optimization across hardware and software.
At the same time, the smartphone industry is undergoing structural changes. Some brands are consolidating resources to improve efficiency and strengthen bargaining power, while others are exiting the market altogether, reflecting intensifying competitive pressures.
Market Outlook: Continued decline expected
According to TrendForce, global smartphone production in 2026 is projected to decline by around 10% year-over-year, reaching approximately 1.135 billion units. In a more pessimistic scenario, the contraction could exceed 15%.
The current market dynamics highlight a growing imbalance in the industry. While semiconductor technologies continue to advance, rising component costs, particularly in memory, are becoming a key constraint on end-device growth.
In this environment, the ability to balance performance, cost, and market demand will be critical for companies aiming to maintain competitiveness in the evolving smartphone landscape.
