The cost of smartphones is going to increase as chip makers like Qualcomm and MediaTek bring new AI features to their platforms

The price of smartphones – pretty much across the board – is going to increase in the very near future. The reason? AI.

Apple, Google, Samsung, and now chipmakers like Qualcomm and MediaTek are all in on AI, and by proxy that means you are too, whether you like it or not.

The upshot of this is that smartphones will get smarter, more useful. We’ve seen Google use AI and machine learning to great effect on its Pixel 8 series of smartphones. Apple’s iPhone 16 series will do something similar as well, representing Apple’s first foray into consumer-facing AI.

AI-Powered Chips Will Cause Smartphone Price Increase

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The Nothing Phone (2a) – The Last Bastion of Good Looking Value For Money

But there is a downside, and it relates to cost. Qualcomm has confirmed that it plans to raise the cost of its Snapdragon 8 Gen 4 platform in 2025. MediaTek will do the same, I imagine. Intel too.

And the net result of this is that smartphone prices, notably on flagship models will follow suit as phone makers scramble to cover the increased cost of making their phones.

Bundling AI into a new chipset platforms isn’t cheap, it costs billions in R&D and that cost, of course, has to be accounted for. Phone brands will be forced to pick up the tab and they will then have to adjust their prices accordingly.

In a statement to Android Authority’s Hadlee Simons, Qualcomm SVP Chris Patrick said, “We do expect the (Snapdragon 8) Gen 4 will have some cost increase as we really pursue really astonishing levels of performance”.

Why The Snapdragon 8 GEN 4 Will Cost More

While not entirely unexpected, the anticipated price increase for the Snapdragon 8 Gen 4 and consequently, smartphones equipped with it, can be attributed to several factors:

  • Advanced Manufacturing Process: Qualcomm has confirmed utilizing TSMC’s leading-edge N3E node for the 8 Gen 4 chipset. This cutting-edge technology delivers superior performance but often comes at a premium cost.
  • Dual Sourcing of Components: While initial reports suggested the chip might be solely manufactured by TSMC, Qualcomm recently announced a dual-source strategy, including Samsung Foundry.
  • Shifting Landscape in Manufacturing Costs: Traditionally, Samsung Foundry has been known for offering a more cost-effective alternative. However, their latest 3 GAP gate-all-around node, the first of its kind, might not follow this trend. This new technology potentially incurs similar or even higher production costs compared to TSMC’s N3E node.

Impact on You, The Consumer

Flagship phones are going to get more expensive. I’d argue the price of the average “flagship” is already heavily inflated, so adding in an extra 10% or 20% to the RRP is not going to play well with consumers. 

Not when you actually have some good value smartphones around now like the Pixel A series and Google’s Pixel 8 which are both aggressively priced compared to similar models from Apple and Samsung. 

Again, it is this blind desire for more power, more features that causes these never-ending price hikes. And the irony of this is that most users – even those that happily pay the inflated prices – seldom use half of the features and capabilities they’re paying for. 

What’s the moral of the story here? Don’t be mugged off by the promise of new features and “breathtaking” performance at an inflated price. You’re using a phone, not a gaming rig PC. Vote with your dollars and spend your money in the mid-range section of the market.

This is why I advise KYM readers to look for value for money, not marketing gimmicks, to explore refurbished phone options and cheaper models like the Google Pixel 7a and Pixel 8a.

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