ISLAMABAD: The increasing use of AI, along with the impact of the global “chip war”, is becoming evident even in local markets, as smartphone prices have started to rise.

While Infinix and Tecno have already announced higher rates, other brands, including Vgotel, Vivo, Realme, Oppo, etc., plan to announce new rates in the coming week.

Manufacturers say this is due to the high cost of chipsets.

“The memory chips have become costlier, between 20 and 30 per cent, and all of it is imported,” said Muzaffar Paracha, Senior Vice-Chairman of the Pakistan Mobile Phone Manufacturers Ass­ociation (PMPMA).

Manufacturers cite higher memory-chip costs, AI-driven demand and global supply constraints for rising handset prices

Manufacturers noted that the cost of memory chips has increased by $20-30 per set. This is because the world is facing a shortage of memory chips.

“There are only three key producers of mobile phones — Apple, Samsung and Chinese brands that dominate world markets,” said Amir Allawala, a senior member of the association.

He added that, due to new developments, the prices of many items are rising rapidly, such as solar panels, ICs, and chipsets, as the world moves towards 5G-compatible mobile devices.

Apart from Samsung and Apple, almost all mobile phone manufacturers globally have been hit by a severe shortage of memory chips.

Most mobile phone chipsets for motherboards, such as processors and memory chips, are produced in Taiwan. Apple and Samsung phones, however, have their own supply lines for memory chips used in their devices.

Supply of memory chips has been constrained in Taiwan and Japan due to continuously rising demand across all sectors, including non-mobile manufacturers.

“This is because of extensive use of AI in almost all apps, which has led to the use of higher-capacity memory chips,” said Zeeshan Miannoor, vice chairman of the PMPMA.

“Now almost all preloaded apps on phones have AI features, which has led to increased memory requirements for both RAM and ROM,” he added.

Currently, the minimum smartphone memory configuration is 4GB RAM (random access memory) and 64GB ROM (read-only memory).

RAM serves as short-term storage for what the CPU is currently using, while ROM stores permanent startup code and essential data.

Taiwanese memory-chip makers have almost stopped producing 4GB/64GB chips, and prices of 4GB/128GB IC chips have increased significantly due to a shift in production towards 6GB/256GB chips.

“This is because the world is shifting to higher-capacity and 5G-compatible sets,” said Naveed Gaba, CEO of VGOTel.

As manufacturers shift to higher-capacity memory chips, there is a shortage of lower-capacity chips, while newer ones are more expensive.

He added that Chinese companies have started focusing on chip manufacturing, but this will take time.

Meanwhile, a senior expert in the field said recent conflicts in 2025 have highlighted the importance of autonomous weaponry such as missiles and drones. The expert added that high-grade chipsets and memory chips are in demand from sectors beyond IT and telephony.

Mr Allawala added that smartphone prices will rise and that the government needs to devise innovative options.

“There have been talks for some time about smartphones being sold on installments. This would allow consumers to buy phones more easily,” he said, adding that the government must facilitate greater localisation, which would help reduce the cost of other components used in mobile sets.

Around 31 million mobile sets are produced locally, but about 47pc are still 2G feature phones, as 4G and data services are not available in many remote and low-population areas.

After the upcoming spectrum auction, demand for smartphones with higher memory capacity is also expected to increase, as telecom operators roll out 4G services in more underserved areas.

Published in Dawn, January 4th, 2026