In 2026, smartphones and other devices will likely be more expensive, not because of new features, but because memory is getting more costly as the AI industry grows.
Memory manufacturers are now focusing more on AI data centers instead of consumer devices, which is causing supply shortages. The International Data Corporation says this could lead to a 0.9 percent drop in the smartphone market by 2026. Counterpoint Research expects memory prices to rise by 30 per cent later this year and another 20 percent early next year.
Tech giants like Meta, Microsoft, and Google are rapidly expanding their data centres to meet the growing demand for AI. McKinsey reports that global data center investments could reach $7 trillion by 2030.
Manufacturers like Micron and Samsung are changing their focus. Micron announced it will exit the consumer memory business to focus on AI data centers. Samsung says shortages in mobile and PC memory will increase.
TrendForce estimates that smartphone production costs will rise by 8 to 10 percent in 2025 because component prices are going up. Analysts warn that cheaper Android phones will be hit hardest since they already have thin profit margins.
Some companies may delay launches or focus on high-end models instead. IDC predicts average smartphone prices will reach $465 in 2026, with the global market hitting a record $578.9 billion.
Prices may stabilize later next year as supply catches up with demand. However, analysts say the industry was not ready for how quickly AI is growing.
