Nothing CEO Carl Pei Issues Stark Warning to Smartphone Buyers
Nothing CEO Carl Pei just delivered a harsh reality check for anyone planning to purchase a new smartphone this year. In a detailed post on X, he warned that customers will face an impossible choice in 2026. They must either pay significantly more for new phones or settle for downgraded specifications. There is essentially no middle ground available.
The End of Cheap Components
The culprit behind this shift is not corporate greed. It is a structural collapse in the economics of smartphone manufacturing. For fifteen years, Pei explained, the industry operated on one unbreakable assumption. Components get cheaper every year. Brands could add more RAM, faster storage, and premium displays without raising prices. That assumption has finally died.
AI is Consuming Smartphone Memory Chips
The reason is straightforward. AI has fundamentally reshaped demand for memory chips. The same DRAM and NAND that power your phone are now critical for AI data centers. Hyperscalers like OpenAI and Google are locking in silicon wafer capacity years in advance. For the first time ever, phones are competing directly with AI infrastructure. And they are losing badly.
The numbers tell the story. Memory costs have already tripled in some cases. Pei gave a concrete example that cuts to the heart of the problem. A memory module that cost less than $20 a year ago could exceed $100 by year-end for flagship phones. That is not just a price bump. That is a fundamental restructuring of the bill of materials.
Phone Makers Face a Tough Corner
This forces phone makers into a corner. Pei says makers may raise prices by 30%, 40%, or even more. The other outcome, per him, is downgraded specs. Strip RAM. Cut storage. There is no escape hatch, says Nothing CEO. He argues that brands that built their entire reputation on offering more specs for less money will struggle most. Nothing will raise prices across its lineup, Pei said, particularly as it upgrades to faster UFS 3.1 storage this quarter.
The Specs Race is Finally Over
But Pei sees this crisis as a turning point for companies like Nothing. For years, Nothing bet against the specs race. While competitors raced to pack in more RAM and faster processors, Nothing focused on how phones actually feel. Design. User experience. How a device sits in your hand. Most of the industry dismissed this philosophy, per CEO.
Now, with cheap silicon gone and specs no longer an economic advantage, Pei argues that experience and intentional design become the only real differentiators, Nothing CEO says. Further adding to this, Pei argues that this is exactly what Nothing was built for. Nothing CEO ended his note saying, “The era of cheap silicon is over. The era of intentional design is just beginning.”
