AI data centers are making the cheapest phones disappear
Memory chips diverted to data centers have pushed entry-level phone prices up by a fifth in India and killed sub-$100 models.
The phones that bring most new users online are getting more expensive, and the AI boom is why. Rest of World reported on October 5 that demand for memory chips from AI data centers is pushing smartphone makers to raise prices and drop some of their cheapest models.
It starts with memory. Ramon Llamas of the research firm IDC told the publication that in late 2025 the three main memory makers moved the vast majority of their supply to AI data centers instead of consumer electronics. Phones use that same memory. With less of it going around, the chips cost more.
The price effect is already showing. Prices of existing smartphones rose about 15% globally in 2026, according to the article, and newly launched models cost about 25% more than a year earlier. By region the jump is uneven. India saw 21%, Asia-Pacific 19%, the Middle East and Africa 18%, the United States 5%.
At the bottom of the market the shift is stark. Rest of World reported that Xiaomi's Redmi 15C rose from 12,499 rupees ($140) in December 2025 to 16,999 rupees ($190) in June 2026, and that Vivo pushed its main entry-level model above $100 in most markets. In Africa, shipments of phones under $100 fell 34% year over year in the second quarter of 2026.
Phone makers are walking away from the bottom. Chinese manufacturers including Xiaomi, Oppo, Vivo and Huawei have sharply cut their entry-level projects, according to the article. Ivan Lam of Counterpoint told Rest of World that phones that used to sell below $150 may move to below $250, or even $300.
That matters because a cheap phone is how many people first reach the internet. As Rest of World put it, "AI data centers are driving demand for memory chips, pushing phone makers to raise prices and abandon some of their most affordable models." The infrastructure behind one kind of access is quietly raising the price of another.
Sources
- The AI boom is making the world’s cheapest smartphones disappear · Rest of World