Smartphone Prices Expected to Rise in 2026 Due to Memory Chip Shortage

TLDR

• Global smartphone shipments expected to drop 2.1% in 2026 due to memory chip shortages caused by AI data center demand
• Average smartphone prices projected to increase 6.9% year-over-year in 2026, up from earlier forecast of 3.6%
• Low-end phones under $200 seeing production costs rise 20-30% since start of year
• DRAM memory chip prices could climb another 40% through Q2 2026
• Apple and Samsung best positioned to handle price increases while Chinese brands face tighter margins

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Smartphone buyers should prepare for higher prices next year. Research firm Counterpoint says the average smartphone will cost 6.9% more in 2026 compared to 2025.

The price jump comes from a shortage of memory chips. AI data centers are using more of these chips, leaving fewer available for phones.

Global smartphone shipments are expected to fall 2.1% in 2026. This represents a downgrade from Counterpoint’s previous forecast of flat or slightly positive growth.

The problem centers on DRAM memory chips. These components are essential for both AI servers and smartphones. Demand from AI applications has pushed DRAM prices up sharply this year.

Cost Increases Hit Budget Phones Hardest

Budget smartphones priced under $200 face the steepest cost increases. Production costs for these devices have risen 20% to 30% since January 2025.

Mid-range and premium phones also saw increases. Their manufacturing costs went up 10% to 15% during the same period.

Counterpoint predicts memory prices could rise another 40% through the second quarter of 2026. This would push production costs 8% to 15% higher than current levels.

The chip shortage stems from how the industry allocates resources. Companies like SK Hynix and Samsung supply memory chips to both smartphone makers and AI server manufacturers like Nvidia.

AI data centers require more memory chips per server than a smartphone needs. This sudden shift in demand caught the industry unprepared.

Major Brands Better Equipped Than Smaller Players

Apple and Samsung have the strongest position to handle rising costs. Both companies have more flexibility in managing profit margins versus market share.

Chinese smartphone makers face more pressure. Brands like Honor Device and Oppo compete in the entry-level and mid-range segments where profit margins are already thin.

Some manufacturers may cut costs elsewhere to offset chip prices. Options include using lower-quality camera modules, displays, or audio components. Others might reuse older parts from previous models.

Companies are also expected to push consumers toward higher-priced devices. This strategy helps maintain profit margins despite increased production costs.

IDC, another research firm, also forecasts a decline in smartphone shipments. Their projection shows a 0.9% drop in 2026, citing the same memory chip price pressures.

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