@kazani

Carl Pei: Why Your Next Smartphone Will Cost More 2026 will be an unprecedented year for consumer electronics, and the smartphone industry in particular. For fifteen years, the smartphone industry relied on a single, reliable assumption: components would inevitably get cheaper. While short-term volatility existed, the long-term downward trend in memory and display costs allowed for annual spec bumps without price hikes. In 2026, that model has finally broken, driven by a sharp and unprecedented surge in memory costs. AI has fundamentally reshaped demand. The same memory used in smartphones is now critical for AI data centers, as hyperscalers lock in silicon wafer capacity years in advance to fuel the AI boom. For the first time, smartphones are competing directly with AI infrastructure and memory prices are rising sharply as a result. In some cases, memory costs have already increased by up to 3x, with further rises expected as unprecedented demand continues to swallow available supply. Memory is fast becoming one of the most expensive smartphone components and potentially the single largest cost driver in the bill of materials by year-end, with estimates suggesting that memory modules which cost less than $20 a year ago could exceed $100 by year-end for top-tier models. The result is a structural shift. This is a reversal of everything we’ve come to expect from this industry. When something that used to get cheaper every year suddenly becomes a lot more expensive, the economics of building a smartphone fundamentally change. Brands now face a simple choice: raise prices, by 30% or more in some cases, or downgrade specs. The “more specs for less money” model that many value brands were built on is no longer sustainable in 2026. As a result, some markets, particularly entry and mid-tier segments, are likely to shrink by 20% or more, and brands that have historically dominated these segments will struggle. Pricing will inevitably also increase across our smartphone portfolio, particularly as we will upgrade some products launching this Q1 to UFS 3.1. However, for Nothing, the current situation represents a great opportunity. Operating without the cost advantages of industry giants forced us to innovate differently. We learned early on that we couldn’t win on spec sheets alone; instead, we focused on perfecting the user experience, proving that how a phone looks and feels matters far more than its raw numbers. That’s where our focus has always been. 2026 is the year the "specs race" ends. As the industry resets, experience becomes the only real differentiator. That is exactly what Nothing was built for. The era of cheap silicon is over. The era of intentional design is just beginning. https://x.com/getpeid/status/2011264565598912657

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