Smartphone Prices May Go Up Sharply in 2026, Says Report

People planning to buy a new smartphone in 2026 may have to spend more. Research firm Counterpoint has forecast that the average selling price of smartphones worldwide will increase by 6.9 per cent in 2026. The main reason is the growing demand for artificial intelligence data centres, which are consuming vital electronic parts at a rapid pace.

Artificial intelligence data centres are large facilities filled with powerful computers that process huge amounts of information. These centres need advanced memory chips to run complex AI systems. Smartphones also rely on the same type of chips, especially DRAM (Dynamic Random Access Memory). DRAM is the part of a phone that keeps it fast and responsive when handling apps, games, and photos.

Why Memory Chips Are Becoming Expensive

Suppliers of memory chips are now focusing significantly on AI data centres with higher profits, as transactions with them entail more benefits compared to those with smartphone companies. With AI firms thrusting across the world, demand for memory chips is on the rise, and only fewer chips are left for phone makers. This shortage is pushing up costs for smartphone production.

Counterpoint analysts warn that memory chip prices may rise by as much as 40 per cent in the first half of 2026. The increase is already visible in the "bill of materials", or BoM, which means the total cost of all parts needed to build a phone.

Impact on Different Price Segments

Budget smartphones priced under 200 dollars will have to bear higher price tags. Their production costs may jump between 20 and 30 per cent in just one year. Mid-range and premium models are also in the fray, with BoM costs rising by 10 to 15 per cent.

With this, the global smartphone shipments are now expected to fall by 2.1 per cent in 2026.

How Brands Are Coping

Big companies such as Apple and Samsung are better positioned to handle the situation with their size, strong supplier relationships, and focus on premium models. Ability to spread costs across their product lines would help them mitigate the impact. However, smaller manufacturers, especially Chinese brands that compete mainly with price, will have to bear the brunt of the situation, as they will be compelled to cut back on features such as cameras, displays, or speakers, as well as reuse older parts or limit upgrades to keep phones affordable.

Shift Towards Premium Models

Industry experts believe manufacturers will increasingly push higher-priced "Pro" models. These versions usually have better profit margins, which makes it easier for companies to absorb rising costs without losing too much revenue.

What It Means for Consumers

For buyers, the outlook is less positive. Smartphones may become more expensive, and some models could offer fewer features than before. Consumers who delay upgrading may find that current devices are cheaper than those released in the next two years.