BT warns UK smartphone prices may rise due to AI-driven chip shortages

What BT’s chief executive actually said

BT chief executive Allison Kirkby issued a public warning on 21 May 2026 that the cost of smartphones could increase in the UK. The cause, according to Kirkby, is the surge in demand for semiconductor chips driven by the artificial intelligence boom.

Allison Kirkby said she was anticipating shortages as tech firms bought large quantities of memory chips to power the datacentres relied on by AI.

The warning was reported by the Guardian and positions BT, one of the UK’s largest telecoms operators and the owner of mobile network EE, as concerned about a supply chain pressure that sits outside its direct control.

How AI datacentres are competing with smartphones for chips

The connection between AI infrastructure and your next smartphone upgrade is a supply chain one. Modern AI systems rely on high-capacity memory chips to process and store enormous volumes of data at speed. The largest technology companies in the world, including cloud providers and AI platform operators, have been purchasing these components in bulk to build out datacentre capacity.

Smartphone manufacturers use many of the same categories of memory chip. When a large portion of global output is reserved for datacentre use, the remaining supply available to consumer electronics firms shrinks. Constrained supply with sustained or growing demand typically results in higher component costs, which manufacturers may then pass on to retailers and ultimately to consumers.

Kirkby’s comments suggest that BT, which procures and sells handsets directly to customers through its EE brand, is already monitoring this risk closely.

What types of chips are involved

BT’s warning centres on memory chips rather than the more widely discussed processor chips such as those made by Nvidia. Memory chips, including DRAM and NAND flash variants, are produced by a relatively small number of global manufacturers, among them Samsung, SK Hynix and Micron. Both AI infrastructure and consumer smartphones depend on these components.

The concentration of manufacturing among a handful of suppliers means that a significant shift in demand from one sector, such as AI datacentres, can have a measurable effect on availability and pricing across the whole market. Exact figures on the current supply-demand balance in memory chip markets were not confirmed in BT’s public statement and remain pending verification from industry analysts.

What this means for UK consumers buying or upgrading a smartphone

For UK consumers, the practical concern is whether handset prices will rise when contracts come up for renewal or when buying outright. At present, no network operator or major handset manufacturer has announced specific price increases linked to chip shortages.

BT’s warning is forward-looking. Kirkby described anticipating shortages rather than confirming that shortages had already affected pricing. This means the impact on UK retail prices, if it materialises, is likely to be felt over the coming months rather than immediately.

Consumers who are mid-contract are insulated from immediate changes. Those due to renew or looking to upgrade in the near term may wish to compare current deals before any potential increases filter through to retail.

For general guidance on mobile contract rights and price increases, Ofcom’s consumer advice pages explain what protections apply when a provider changes the terms of your contract.

BT’s position in the UK mobile market

BT Group operates the EE mobile network, which is one of the UK’s four main mobile operators. EE sells both pay-monthly contracts that include handsets and SIM-only plans. As a large-scale procurer of smartphones for resale, BT is exposed to wholesale price movements in the handset market to a greater degree than a smaller retailer.

Kirkby’s decision to raise this issue publicly is notable because it signals that a major UK telecoms operator views chip supply as a live commercial risk, not a distant hypothetical. It also reflects the broader tension that has emerged across several industries as AI infrastructure investment accelerates at a pace that strains component manufacturing capacity.

The wider context: AI investment and supply chain pressure

The AI boom has created extraordinary demand for computing hardware. Major technology firms have committed hundreds of billions of dollars globally to datacentre expansion over the past two years. While much of the public attention has focused on graphics processing units (GPUs), the volume demand for memory chips is a quieter but equally significant consequence of this investment cycle.

Supply chain analysts have noted that memory chip pricing is cyclical and has previously recovered from periods of high demand. Whether the current AI-driven demand cycle will be absorbed by expanded manufacturing capacity, or will persist as a sustained constraint on consumer device supply, remains a question for the industry. Specific forecasts on memory chip pricing were not available from BT’s public statements and are pending verification from semiconductor market research sources.

What you can do today

If you are concerned about rising smartphone costs, there are practical steps worth considering now.

Check when your current contract ends. If you are within the final month, you are typically free to negotiate or switch without penalty.

Compare SIM-only deals if you already own a compatible handset. Separating your airtime costs from your handset costs gives you more flexibility if handset prices do rise.

Use comparison tools such as those available through Which? or MoneySavingExpert to benchmark current contract prices before any changes take effect.

If a provider does increase prices during your contract, Ofcom rules may give you the right to exit without a penalty fee depending on the terms of your agreement. Check your contract documentation or contact your provider directly for clarification.

For more on how network operators and pricing issues affect UK mobile customers, see our mobile industry news hub.

This article is based on reporting by the Guardian published on 21 May 2026. Specific figures on chip supply volumes and projected retail price increases are pending further verification from industry and manufacturer sources.