Smartphones could get pricier next year — and not because of flashy new cameras, giant displays or massive storage. This time, it’s a basic component driving up costs: memory.
The price surge won’t stop at phones. Tablets, laptops, and smartwatches may all feel the impact as memory supplies tighten.
The squeeze is being driven by tech giants rapidly expanding their AI data centers. As companies like Meta, Microsoft and Google race to build the infrastructure powering artificial intelligence, demand for data-center memory has skyrocketed — and manufacturers are shifting production accordingly.
“It’s pretty much brutal and crunched across the board,” said Yang Wang, senior analyst at Counterpoint Research.
According to the International Data Corporation (IDC), the global smartphone market is expected to shrink by 0.9% in 2026 partly due to memory shortages. Counterpoint Research forecasts memory prices to jump 30% in the final quarter of 2025 and another 20% early next year.
Data-center construction is exploding, with companies projected to invest nearly US$7 trillion by 2030, according to McKinsey & Company.
Memory makers like Samsung and Micron are responding by prioritizing data-center products — which use different, more advanced types of memory — leaving fewer resources for consumer electronics. Micron even announced this week that it is exiting the consumer memory business entirely, citing overwhelming AI-related demand.
Samsung has also warned that shortages in mobile and PC memory could worsen, driven by the same AI wave.
With memory costs climbing, phone makers are facing tough decisions. TrendForce estimates that rising memory prices have made smartphone production 8–10% more expensive in 2025.
Cheaper Android devices may be hit hardest, said IDC’s Nabila Popal, because their smaller margins make it difficult to absorb higher component costs.
“It’s going to be almost impossible for them not to raise prices,” she said.
Some companies may delay launches or shift focus to higher-end models that offer better profit margins. IDC expects the average selling price of smartphones to rise from US$457 in 2025 to US$465 in 2026, pushing the market to a record US$578.9 billion.
However, analysts say relief may arrive late next year as supply stabilizes, potentially easing or capping price increases.
The semiconductor industry is no stranger to supply-and-demand turbulence, Wang noted — but the speed of AI-driven growth caught many off guard.
“This was kind of unexpected,” he said.
