Nothing co-founder Carl Pei reveals why smartphones will become more expensive in the coming years

carl pei

• Smartphone prices set to rise sharply due to AI-driven memory demand
• Brands may raise prices by 30% or downgrade specs, especially for budget models
• Carl Pei predicts 2026 will shift focus from specs to intentional design.

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Smartphones are about to get more expensive, and according to Carl Pei, the reasons go far beyond brand pricing or yearly upgrades. In a recent post, the Nothing co-founder explained why the industry is heading into a phase where higher prices are almost unavoidable.

Pei says 2026 will be a “turning point” for consumer electronics, especially smartphones. For nearly 15 years, phone makers worked with a simple assumption. Even if costs went up briefly, components like memory and displays always became cheaper over time. That trend allowed companies to improve specs every year without raising prices. “In 2026, that model has finally broken,” Pei wrote.

The main culprit is AI. The same memory used in smartphones is now in massive demand from AI data centers. According to Pei, big tech companies are locking in chip supply years in advance to support the AI boom. For the first time, smartphones are directly competing with AI infrastructure for the same components, and that competition is driving prices up fast.

Pei says memory costs have already risen sharply. “In some cases, memory costs have already increased by up to 3x,” he noted, adding that further increases are expected. He warned that memory modules that cost less than $20 a year ago could cross $100 for top-tier phones by the end of the year. That makes memory one of the most expensive parts inside a phone, completely changing how devices are priced.

This shift leaves phone brands with a difficult choice. “Brands now face a simple choice,” Pei wrote. “Raise prices, by 30% or more in some cases, or downgrade specs.” He added that the long-running idea of offering more features for less money is no longer realistic, especially in entry-level and mid-range phones. As a result, those segments could shrink sharply, and brands that depend on them may struggle.

Even Nothing will not escape these pressures. Pei said pricing will “inevitably also increase across our smartphone portfolio,” particularly as some upcoming products move to faster storage standards. Still, he sees this moment as an opportunity rather than a setback.

Because Nothing never had the scale of industry giants, Pei said the company learned early that it could not win on specs alone. “We focused on perfecting the user experience,” he wrote, arguing that “how a phone looks and feels matters far more than its raw numbers.”

Pei believes 2026 will mark a major reset for the industry. “2026 is the year the specs race ends,” he said. “The era of cheap silicon is over. The era of intentional design is just beginning.”

For consumers, that likely means paying more for their next phone. For the industry, it means redefining what really makes a smartphone worth buying.