Smartphones are set to get noticeably more expensive in 2026, with average prices expected to rise by nearly 7% worldwide. This jump will be driven mainly by the growing demand for AI data centers, which is pushing up the cost of crucial phone components, especially memory chips.
A new study by Counterpoint Research warns that if you are planning to buy a new smartphone in the next year or two, you may have to budget more. The report links the upcoming price surge directly to how AI infrastructure is reshaping global tech supply chains and diverting key hardware away from handset makers.
AI Data Centers Gobble Up Memory Needed for Phones:
The biggest pressure point comes from AI data centers that are consuming critical components at an unprecedented pace. These server farms, often powered by advanced NVIDIA-based systems, rely heavily on DRAM memory chips, the same type of memory that modern smartphones need for smooth multitasking, gaming, and AI-driven features on-device.
Memory suppliers find AI data center orders far more profitable than smartphone contracts, so they are prioritizing those high-margin customers. This has created a supply squeeze, leaving phone makers scrambling for limited memory at higher prices. Counterpoint’s analysts expect memory prices to rise by up to 40% in just the first half of 2026, a spike that will inevitably seep into smartphone production costs. In simple terms, the same DRAM chips that help run powerful AI models in server racks are also needed to keep your phone fast and responsive. When data centers outbid smartphone brands for that memory, handset production becomes more expensive and the extra cost moves down the chain to the end user.
Component Costs Already Surging Across Price Segments:
The “bill of materials” (BoM), which is the total cost of the parts needed to make each phone, already shows the impact. Budget devices under $200 have been severely hit thus far, according to Counterpoint. In only a single year, their production costs increased by 20–30%, placing tremendous pressure on companies in this market who have narrow profit margins.
Mid-range and premium phones are not immune either. For these categories, BoM costs have risen by around 10–15%. When core components like DRAM and other memory become more expensive, manufacturers have two basic choices: absorb the hit and accept lower profits, or pass part of the increase to buyers through higher retail prices or trimmed specifications. Because of these cost pressures, Counterpoint now expects global smartphone shipments to actually fall by 2.1% in 2026, reversing earlier predictions of growth. Some consumers may delay upgrades or hold onto existing devices longer as new models become pricier.
Prices Seen Rising 6.9% on Average in 2026:
The study forecasts that the average selling price (ASP) of smartphones worldwide will climb by 6.9% in 2026, which is significantly sharper than what was earlier anticipated. This rise is not just a currency fluctuation or a normal yearly adjustment; it reflects structural shifts in the supply chain as AI demand sucks up more hardware capacity.
For most buyers, this means upcoming phone launches are likely to arrive at higher launch prices than current equivalents, or with small downgrades in specs to keep sticker prices in check. Either way, the value equation will change, especially in the lower and mid tiers. However, not all brands will feel the squeeze equally. Big names like Apple and Samsung are better positioned to weather the storm. Their advantages include larger scale, stronger and longer-term supplier relationships, and a bigger presence in the premium segment where margins are thicker and customers are more willing to accept higher prices.
Smaller Brands and Budget Phones Face Tough Choices:
Smaller manufacturers are in a more difficult situation, especially those who concentrate on aggressively priced budget and mid-range products. In order to keep phones affordable, many Chinese firms who previously competed primarily on low costs are already forced to make concessions, such as reducing promotional spending, utilizing slightly cheaper components, or reducing features.
The firm expects that more companies may reconsider their product strategies in the future. Higher-priced “Pro” or flagship-like models, which offer better margins and can more readily tolerate increased component costs, are one possible result. However, year-over-year improvements to entry-level and mid-range phones may be quite small, or they may even have somewhat inferior specs at the same price ranges.
For consumers, the net result over the next couple of years is likely to be:
- Higher launch prices on many new models
- Fewer true “value-for-money” budget devices
- A clearer tilt in portfolios toward premium or Pro variants
In addition to cloud and data centers, common products like smartphones will also be impacted by AI’s ongoing transformation of digital infrastructure, beginning in 2026 with the prices consumers pay at retail counters.
