- By Prateek Levi
- Thu, 18 Dec 2025 10:01 PM (IST)
- Source:JND
The upcoming year, i.e., 2026, will be a bit upsetting for people who are willing to get their hands on the latest smartphones, as the prices are going to touch a new sky-high limit this time, and this comes at the backdrop of a microchip shortage worldwide as AI data centres' continued demand rises, which is giving rise to hefty manufacturing costs across the industry.
As far as industry expectations go, you could witness a rise of 6.9% year-over-year in 2026, which is almost double of what previous forecasts predicted, Counterpoint Research notes. Global smartphone shipments are expected to fall as well and the predictions point to a 2.1% decrease in 2026, which is a staggering turnaround from the estimated 3.3% growth in 2025, according to Counterpoint Research. The biggest hit will be in the budget phone segment, where rising costs are forcing manufacturers to rethink their portfolios.
The crunch is being driven by soaring demand for DRAM chips, essential for both AI data centres and smartphones. AI infrastructure expansion has created bottlenecks, pushing memory prices up around 40% through mid-2026. Manufacturing costs have surged this year, with budget phones under $200 seeing 20-30% increases in the bill of materials, while mid-range and premium devices face 10-15% hikes. Another 8-15% rise is expected in early 2026.
"In the lower price bands, steep price increases on smartphones are not sustainable," says Counterpoint Senior Analyst Yang Wang. "If cost pass-through isn't possible, OEMs will start pruning parts of their portfolios—that's actually what we are starting to see with significantly reduced volumes of low-end SKUs."
Apple And Samsung Might Be Prepared
Apple and Samsung are positioned best to weather the shortage, with shipment declines projected around 2%, while Chinese brands like Honour, Oppo, and Vivo could face steeper drops, with Honour potentially exceeding 3%.
ALSO READ: Snapchat Introduces Quick Cut For Faster Short-Video Creation: Here's How It Works
To manage rising costs, some manufacturers are downgrading camera modules, displays, and audio components, or reusing older parts. Others are nudging consumers toward higher-priced “Pro” models to protect profit margins. For buyers, this means 2026 phones may cost more and offer fewer meaningful upgrades, especially in the budget and mid-range segments where memory shortages bite hardest.