{"id":369787,"date":"2026-01-14T18:17:10","date_gmt":"2026-01-14T18:17:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/369787\/"},"modified":"2026-01-14T18:17:10","modified_gmt":"2026-01-14T18:17:10","slug":"ai-boom-means-your-next-phone-will-cost-more-warns-nothing-boss","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/369787\/","title":{"rendered":"AI boom means your next phone will cost more, warns Nothing boss"},"content":{"rendered":"

The boss of Nothing, the British smartphone maker, said his industry is facing a \u201cfundamental change\u201d as unprecedented demand for memory chips driven by the artificial intelligence boom has seen costs soar. <\/p>\n

Carl Pei, the founder and chief executive of the company, said smartphone manufacturers and the broader consumer electronics sector would have to navigate a \u201cstructural shift\u201d as a result of the higher prices of memory chips and that the \u201cera of cheap silicon is over\u201d. <\/p>\n

\u2022 UK smartphone company Nothing valued at $1.3bn after fundraising<\/a><\/p>\n

The \u201csharp and unprecedented surge\u201d in prices has \u201cbroken\u201d the long-term downward trend in component costs, which he said had allowed for gradual specification improvements without significant price rises.<\/p>\n

Higher demand for memory chips caused by the AI boom<\/a> and the related race to build data centres has caused a shortage and significant price increases. <\/p>\n

Samsung, Arm and Qualcomm are among technology giants that have this month warned of a supply squeeze for memory chips. <\/p>\n

Pei said: \u201cAI has fundamentally reshaped demand\u201d and in some cases costs have tripled, \u201cwith further rises expected\u201d. He said memory components could be the \u201csingle largest cost driver\u201d for smartphone materials by the end of the year, with parts that would have cost less than $20 a year ago reaching more than $100 by the end of 2026.<\/p>\n

\"Advertising<\/p>\n

Nothing is a rare example of a UK hardware technology business<\/p>\n

\u201cThis is a reversal of everything we\u2019ve come to expect from this industry,\u201d Pei wrote in a post on LinkedIn. \u201cWhen something that used to get cheaper every year suddenly becomes a lot more expensive, the economics of building a smartphone fundamentally change.\u201d <\/p>\n

At the recent Consumer Electronics Show in Las Vegas, a key annual event for technology manufacturers, Rene Haas, the chief executive of Arm, said the shortage of memory chips was the most \u201csevere I have seen in at least two decades\u201d while Samsung executive TM Roh called the constraints \u201cunprecedented\u201d.<\/p>\n

Nothing, a rare example of a UK hardware technology business, was founded in 2020 and makes smartphones as well as Bluetooth headphones and watches. <\/p>\n

Pei, a Chinese-born Swedish entrepreneur who previously co-founded OnePlus, the popular Chinese smartphone brand, said brands faced the choice of raising prices by 30 per cent or more or downgrading specifications. \u201cSome markets, particularly entry and mid-tier segments, are likely to shrink by 20 per cent or more, and brands that have historically dominated these segments will struggle.\u201d <\/p>\n

\u201cThe \u2018more specs for less money\u2019 model that many value brands were built on is no longer sustainable in 2026.\u201d <\/p>\n

\u2022 UK smartphone start-up won\u2019t commit to a London IPO<\/a><\/p>\n

Pei said Nothing\u2019s prices will \u201cinevitably\u201d increase but the problems present an opportunity for his company as it has focused on design and user experience because of its inability to compete with the cost advantages enjoyed by its giant rivals. He said: \u201c2026 is the year the \u2018specs race\u2019 ends.\u201d <\/p>\n

London-based Nothing claims to be the world\u2019s fastest-growing smartphone and consumer audio brand.<\/p>\n

Towards the end of last year, it raised funds from about 13,000 ordinary \u201ccommunity\u2019 investors at a $1.3 billion valuation. The company has indicated it is planning an initial public offering within the next three years, but has yet to decide where it intends to float. <\/p>\n

In September it had a $200 million funding round, led by Tiger Global, GV, Highland Europe, EQT and Qualcomm Ventures.<\/p>\n","protected":false},"excerpt":{"rendered":"The boss of Nothing, the British smartphone maker, said his industry is facing a \u201cfundamental change\u201d as unprecedented…\n","protected":false},"author":2,"featured_media":369788,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[554,733,4308,86,56,54,55],"class_list":{"0":"post-369787","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-technology","12":"tag-uk","13":"tag-united-kingdom","14":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/369787","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=369787"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/369787\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/369788"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=369787"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=369787"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=369787"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}