Samsung, Apple to contend with 'phoneflation' as soaring memory prices chip away at profit

The longstanding ceiling on smartphone prices is beginning to crack. With memory chip prices rising at an unprecedented pace, both Samsung Electronics and Apple — which together dominate the global smartphone market — are weighing price increases.

Industry observers say top-tier foldable devices could soon cost more than 3 million won ($1,950) per unit. 

Is "phoneflation" coming this fall?

Samsung's Galaxy Z Flip 8, scheduled for release in August, could be priced at around $1,200, while the flagship Galaxy Z Fold 8 Ultra may reach as much as $2,100, according to Lanzuk, a tech industry tipster with a popular blog, and other industry sources on Monday.

That would put the devices well above the launch prices of their predecessors, with the Galaxy Z Flip 7 starting near 1.48 million won and the Galaxy Z Fold 7 at nearly 2.38 million won. 

The premium smartphone market could face a broader shake-up as Apple, long considered one of the strongest players in the global supply chain, is also being hit by soaring component costs.

Market research firm TechInsights projects that the iPhone 18 Pro, expected to be unveiled in September, will start at $1,299, up $200 from the iPhone 17 Pro's starting price of $1,099.

Apple Chief Executive Officer Tim Cook acknowledged the pressure.

“Unfortunately, price increases are unavoidable,” he told The Wall Street Journal in a story published on Wednesday.  “We’re doing our best to mitigate the huge increases that are being passed to us, and we’ve been trying to shield our customers from the increases, but the situation has become unsustainable.”

Foldable smartphones typically carry higher production costs than conventional bar-type handsets, resulting in higher retail prices.

While Samsung has effectively dominated the foldable market as Apple continued to focus on traditional smartphones, the company has long been cautious about raising prices too aggressively for fear that consumers could switch to iPhones. That concern was one reason Samsung kept Galaxy Z Flip 7 prices unchanged last year. However, if Apple also moves to raise prices, analysts say the benchmark for premium smartphones could shift significantly higher.

Raise prices, risk losing customers

The rapid rise in smartphone prices is increasing pressure on consumers.

Global smartphone shipments will fall to just over 1 billion units this year, down 13.9 percent from a year earlier, according to Counterpoint Research. That would mark the lowest annual total since 2013.

Industry analysts point to an AI-driven surge in memory demand as a key factor behind rising costs. According to TrendForce, mobile dynamic random-access memory prices in the second quarter are expected to increase by as much as 98 percent from the first quarter. In other words, component costs could nearly double in the span of a single quarter.

Manufacturers are also facing growing profitability concerns.

Samsung Electronics' Mobile Experience division will see operating profit decline from 12.9 trillion won last year to 4.5 trillion won this year, according to Meritz Securities’ research center.

Chinese brands such as Xiaomi, which rely heavily on budget smartphone models, could face even greater pressure. As low-cost devices leave little room to pass rising component costs on to consumers, manufacturers may be forced to absorb much of the increase in memory prices.

"Companies are caught in a dilemma," an industry source said. "If they raise prices, demand falls. If they absorb the higher costs, profits disappear. The industry is facing one of the most complex balancing acts it has ever seen."

BY KIM SU-MIN [[email protected]]