Facing the music: Apple, Samsung, and memory cost inflation

Samsung users are still digesting big price increases on the Galaxy S26 series, particularly as they mean some models are now more expensive than equivalently capable iPhones. 

That’s bad news for everyone, of course, but this is unlikely to get any better for some time to come, with memory giant Micron warning that the memory supply/demand imbalance is going to stick around for at least another year, and probably more.

The AI-driven memory price hikes are applying an inflationary squeeze across the entire industry. It’s not the only pressure being felt, as businesses at every scale feel the pain of fuel price and energy cost increases. All this might be a little easier to take if the leaders of the frontier firms creating the memory supply imbalance weren’t also warning us that the tech they’re making is an existential threat to humanity. It makes the financial sacrifice of costlier consumer electronics as a direct impact of that tech invention feel a lot less palatable.

What about Apple? 

Morgan Stanley analyst Erik Woodring believes Apple now has the most exciting product roadmap it has enjoyed for years, but shares the Wall Street consensus that margins will continue to be squeezed by accelerating memory prices. The question on his mind, and on that of other analysts, will be if we’ve seen the last iPhone price hike. Otherwise, Apple’s new leadership may still find itself in the unenviable position of needing to raise prices once again once new memory cost increases strike early next year.

Apple has so far navigated these difficult challenges very successfully. Its heavily telegraphed recent iPhone price increases turned out to be lower than many had feared. The increases were quite nuanced — higher-end customers with larger appetites for storage seemed to bear the brunt of these rises, showing the company leaning into the wealthier and more resilient portions of its hard-won market demand.

Apple also seems to have benefitted from smartphone price hikes more generally, as these have been particularly difficult for smaller competitors. Low-budget smartphone vendors have been squeezed on price and revenue in a highly competitive part of the market. This pressure has been so intense and they’ve been required to raise prices so much that Apple’s entry-level iPhone 17e and second-user devices have become an even more attractive deal.

Samsung is no longer the value option

Samsung’s new price increases match this at the high end. They mean Apple now offers smartphones that compete on price at every market sector. To put this into context, Samsung’s highest end 1TB Galaxy S26 Ultra now costs as much as an entry-level (if there is such a thing) iPhone Duo. At $1,399, the Galaxy S26 Ultra now costs more than the iPhone 18 Pro Max, which starts at $1,299. 

The message is pretty clear: iPhones may not be cheap, but as the price difference erodes, Apple’s value proposition makes its devices hugely attractive to consumers. This new reality is already generating strong results in China and India, while Apple still leads in the US. There is some speculation Apple is dipping into its cash pile to enable it to meet these price bands, but that may matter less, given that the company is on the cusp of major proliferation in services and accessories. 

That proliferation is already taking place. Only this week Apple Pay launched in India, and the company continues to broaden its services offerings with products including AppleCare One, Apple Upgrade, Apple Business and its Creator Studio. But the proliferation is also coming with accessories and smart home product families, with Apple fully expecting a good response from its customers for what it is preparing to offer. To some extent, even if margins on Apple’s biggest-selling product are squeezed, services and a focus on accessories may help push revenue higher, even if there is some risk to the brand. 

What next? Memory prices, logistics costs, and continued international moves toward tech sovereignty — with nations investing in homegrown tech to reduce their dependence on US firms — will continue to transform the industry.

At the same time, we’re heading into an endgame in which we’ll see if Apple’s bet that AI firms will turn into commodities comes true — the downside being that if it does, we’ll see some rampant economic savagery as investors realize billions already invested in not-yet-made data centers will not be coming back. Interesting times.

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