Premiumization and in-house chip strategies favor Apple (AAPL), Samsung Electronics (SSNLF), and Google (GOOG) (GOOGL) as System on Chip, or SoC, market dynamics shift amid memory and storage becoming core cost drivers, according to Counterpoint Research
Analyst Soumen Mandal said that in 2020, memory accounted for about 8% of component costs in a flagship device such as Apple’s (AAPL) iPhone 12 Pro Max (6 GB DRAM and 128 GB NAND). By September 2025, this share had risen to around 10% in the iPhone 17 Pro Max (12 GB DRAM and 256 GB NAND).
Dynamic Random Access Memory, or DRAM, and NAND are two different types of memories.
Meanwhile, in current Android flagships configured with 12 GB-16GB LPDDR5X RAM and 512 GB-1TB Universal Flash Storage, or UFS, 4.0 storage, memory can represent 20% or more of total Bill of Materials, or BoM, with the ongoing memory price hikes, the analysts added.
“This shift reflects not only higher component cost, but also rising demand from on-device AI, advanced gaming, and increasingly complex imaging pipelines,” said Mandal.
In addition, the analyst noted that the rapid expansion of data centers is also tightening supply. As memory suppliers focus on high-bandwidth memory, or HBM, and DDR5 for servers, the capacity of legacy DRAM (DDR4, LPDDR4) has reduced.
Nvidia (NVDA) uses HBM chips for its AI accelerators. South Korean company SK hynix (HXSC.F) is a major supplier of HBM chips to Nvidia and competes with compatriot Samsung and American company Micron (MU).
Memory prices have increased, starting with legacy DRAM. With the rise in LP4 prices, smartphone memory has also started to get costlier. Mandal added that major suppliers are limiting capacity expansion, because of which the low- and mid-tier smartphone segments, which historically benefited from steady memory cost declines, are feeling the most pressure.
Global smartphone shipments are expected to decline 6.1% year-over-year in 2026, while smartphone SoC shipments are forecast to decline 7% compared to 2025, the analyst noted.
“Chinese OEMs are likely to be hit the hardest, while Apple and Samsung are better positioned due to integrated supply chains and a continued shift toward premiumization,” said Mandal.
The analyst added that among SoC vendors, UNISOC faces the steepest decline due to its exposure to the shrinking low-end 4G market.
Meanwhile, Alphabet’s (GOOG) (GOOGL) Google is expected to see the strongest growth, supported by AI differentiation and expanding traction beyond the U.S. and Japan, according to the analyst.
Samsung Electronics’ (SSNLF) launch of the 2 nm Exynos 2600 also strengthens its vertical strategy, while MediaTek and Qualcomm (QCOM) face mixed outcomes as premium platforms offset weakness in volume segments, Mandal noted.
The analyst added that memory and storage requirements continue to increase as smartphones migrate toward LPDDR5X/LPDDR6 and UFS 4.x, increasing silicon costs and raising barriers for mass-market devices.
Mandal said that entry-level and mid-range OEMs are responding by cutting models, lowering specifications, or delaying launches, while premium brands focus on configuration rationalization rather than performance compromise.
Last week, it was reported that Apple (AAPL) is prioritizing manufacturing and shipment of its three highest-end iPhone models for 2026 while delaying the launch of its standard model because of a marketing strategy shift and supply-chain constraints.
The analyst noted that the smartphone market is expected to normalize in the second half of 2027 or early 2028.
“Until then, the industry will navigate trade-offs between cost, performance, and innovation. AI will help sustain demand, but rising in house SoC adoption by leading OEMs will continue to pressure traditional chipset suppliers, reshaping the competitive landscape,” Mandal noted.