Your next smartphone could cost more but offer less RAM:What is the ‘AI Tax,’ a new tech buzzword behind the memory chip shortage

Buying a new smartphone might soon pinch your pocket a little more than usual. And the reason isn’t just inflation or new features. A new industry buzzword, ‘AI Tax,’ is beginning to appear in tech discussions. While it is not an official tax imposed by governments, experts say the global rush to build artificial intelligence systems could quietly push up the prices of phones, laptops, and other gadgets.
In simple terms, the growing demand for AI infrastructure is creating a shortage of memory chips, one of the most important components inside modern electronics. What exactly is the ‘AI Tax’? Despite the name, the AI Tax isn’t a real tax. Instead, it refers to the extra cost consumers may end up paying because the tech industry is prioritising AI hardware.
AI companies are buying large amounts of memory chips to power data centres. As supply tightens for consumer electronics like smartphones and laptops, device prices could increase. Industry estimates suggest that consumer electronics could become 5% to 20% more expensive in the coming years if the shortage continues. Rising prices of key components like processors and graphics cards (GPUs) are expected to push laptop and desktop prices up by up to 35% this year. Market experts believe that this price increase could slow the computer market’s growth by up to 8% this year, according to a Moneycontrol report.
Prices may increase by 10% in March; they have already become expensive by 12% According to Bharat Shenoy, Senior Market Analyst at IDC India, RAM prices have already increased by 2.5 to 3 times. This has led to a 10-12% increase in laptop and desktop prices so far. Another increase of 8-10% is expected in the month of March itself, while prices may increase by another 10% in the next few months. Why memory chips are suddenly in short supply The issue centres on High-Bandwidth Memory (HBM), a fast memory used in AI servers. Since it uses the same semiconductor capacity as DRAM, commonly used in smartphones and laptops, its production can reduce the supply for consumer devices. As AI demand grows rapidly, chip manufacturers are increasingly allocating their production lines to HBM instead of DRAM. The global memory market is mainly controlled by three companies: Reports suggest that much of their HBM production capacity for 2026 has already been booked by companies building AI infrastructure. As a result, fewer DRAM chips are available for consumer devices.
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How this could affect smartphones When memory becomes expensive or difficult to obtain, smartphone brands are left with two choices: increase prices or reduce specifications. To keep devices competitive, many companies may try to maintain similar prices while adjusting the hardware. For example: Mid-range smartphones priced between ₹20,000 and ₹50,000 in India could be particularly affected. Early signs of rising smartphone prices Some smartphone launches already hint at rising costs. Samsung Galaxy S26 Series Nothing Phone 4a Series However, not all companies have increased prices. Some brands have kept them steady. For instance, the iPhone 17e launched at ₹64,900, similar to the previous generation model, while Google’s Pixel 10a debuted at ₹49,999, unchanged from its predecessor.
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A laptop that cost Rs 35,000 will now cost Rs 45,000. Shenoy said that devices that used to be priced in the ₹30,000 to ₹35,000 range are now costing closer to ₹45,000. This will make it difficult for students, home users, and first-time computer buyers to upgrade. Experts say that this boom may continue for the next 6-7 quarters, and there is little hope of getting relief before the second half of 2027.
AI supply chain is a big reason According to Anshika Jain, Senior Analyst at Counterpoint Research, the biggest reason for the surge in memory (DRAM and NAND) prices is the increasing demand for ‘AI infrastructure’. Companies are now shifting production toward high-margin servers and high-bandwidth memory, making parts for typical laptops more expensive. A shortage of Intel’s entry-level processors has also added to the crunch. Companies taking the help of sale and finance scheme Tech brands are adjusting laptop configurations to keep starting prices low and are offering easy installment plans and promotions to attract buyers.
While gamers and professionals may still purchase despite higher prices, demand in the budget segment could slow down. If you plan to buy a laptop or PC, buying sooner may be better, as prices may not drop until 2027. The impact may begin in 2026
Experts believe the shortage will gradually start affecting device production. In the early months, distributors are stocking up on devices to avoid supply disruptions. But the real impact could begin between April and June, when manufacturers start feeling the shortage more strongly. As a result, global smartphone shipments could decline by around 13% in 2026, according to industry projections. Also read: Just got a new iPhone? Do this first: Activate these 5 features immediately for better security

The impact of tensions in the Middle East Industry experts say the crisis could worsen in the future due to ongoing tensions in the Strait of Hormuz, a route crucial for energy and petrochemicals. If the disruptions persist, input costs for semiconductor manufacturing will rise, impacting the availability and pricing of chips.
Prices will still be higher The rapid growth of AI is reshaping the tech industry and could make everyday gadgets more expensive. The so-called “AI Tax” may force consumers to pay more for smartphones, laptops, and PCs, or get lower specifications at the same price.
Experts say prices may stabilise once new chip factories start production, but they are unlikely to return to earlier levels anytime soon.