AI chip shortage will raise smartphone prices in 2026

A shortage of memory chips linked to booming artificial intelligence demand is expected to push up smartphone prices in 2026 and reduce global shipments, according to Counterpoint Research.

The firm said smartphone shipments could decline 2.1% next year, revising down an earlier forecast that had projected flat to slightly positive growth. Shipments measure the number of devices sent into sales channels such as retailers and distributors and are used as an indicator of demand rather than final sales.

At the same time, the average selling price of smartphones is forecast to rise 6.9% year on year in 2026. That compares with Counterpoint’s earlier estimate of a 3.6% increase.

The higher prices are being driven by shortages of specific semiconductor components and bottlenecks across the supply chain, which are lifting overall production costs.

Demand for memory chips has surged as data center construction accelerates worldwide. These facilities rely heavily on systems developed by Nvidia that use memory components supplied primarily by SK Hynix and Samsung.

A key component affected is dynamic random-access memory, or DRAM. DRAM is essential for artificial intelligence data centers but is also widely used in smartphones. Prices for DRAM have climbed sharply this year as demand has exceeded available supply.

Counterpoint said the bill of materials for smartphones priced below $200 has risen between 20% and 30% since the start of the year. The bill of materials reflects the cost of all components required to produce a single device.

For mid-range and high-end smartphones, material costs have increased by about 10% to 15%, according to the research firm.

Memory prices could rise by a further 40% through the second quarter of 2026, Counterpoint said. That could lift overall bill-of-materials costs by 8% to more than 15% above current elevated levels.

The higher component costs are likely to be passed on to consumers, contributing to the increase in average selling prices.

Counterpoint said Apple and Samsung are better positioned than many rivals to absorb near-term cost pressures. Other manufacturers, particularly Chinese brands focused on mid- to lower-priced devices, may face tighter margins.

Some smartphone makers may respond by downgrading components, reusing older parts, or steering buyers toward higher-priced models.