Smartphone Prices Set to Surge in 2026 as Memory Chip Shortage Looms

Your next phone upgrade just got more expensive. A looming memory chip shortage is about to hit consumers where it hurts—the wallet—with smartphone prices projected to climb in 2026.

The Squeeze on Supply

Manufacturers are staring down a perfect storm. Demand for high-performance memory isn't slowing, but production capacity isn't keeping pace. The result? A classic supply crunch that will inevitably be passed down the chain.

Beyond the Checkout Counter

This isn't just about a higher price tag on a new device. It could slow the rollout of feature-packed mid-range models, forcing buyers to choose between paying a premium or settling for less. Innovation in the budget segment might hit a speed bump as costs rise.

While tech CEOs fret over margins, Wall Street analysts will undoubtedly spin the shortage into a bullish narrative for chipmaker stocks—because nothing fuels market optimism like the prospect of everyone else paying more. The bill for progress is coming due, and it's looking like consumers will be picking up the tab.

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

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.

AI CHIP CRUNCH SET TO DRIVE SMARTPHONE PRICE SHOCK

New research warns an AI-driven memory chip shortage will push smartphone prices sharply higher in 2026.

Counterpoint forecasts average selling prices rising 6.9% as DRAM costs surge due to booming data-center demand.… pic.twitter.com/TApOsndwrm

— Info Room (@InfoR00M) December 16, 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.