A shortage of memory chips fueled by artificial intelligence players is likely to cause a price rise in smartphones in 2026 and a drop in shipments, Counterpoint Research said in a note on Tuesday.
Smartphone shipments could fall 2.1% in 2026, according to Counterpoint, versus a previous outlook of flat-to-positive growth.
Shipments do not equate to sales but are a measure of demand as they track the number of devices being sent to sales channels like stores.
Meanwhile, the average selling price of smartphones could jump 6.9% year-on-year in 2026, Counterpoint said, in comparison to a previous forecast of a 3.6% rise.
This is being driven by specific chip shortages and bottlenecks in the semiconductor supply chain, which are pushing up component prices.
The continued build-out of data centres globally has hiked demand for systems developed by Nvidia
However, a specific component called dynamic random-access memory or DRAM, which is used in AI data centers, is also critical for smartphones. DRAM prices have surged this year as demand outstrips supply.
For low-end smartphones priced below $200, the bill of materials cost has increased 20% to 30% since the beginning of the year, Counterpoint said. The bill of materials is the cost of producing a single smartphone.
The mid and high-end smartphone segment has seen material costs rise 10% to 15%.
“Memory prices could rise another 40% through Q2 2026, resulting in BoM costs increasing anywhere between 8% and over 15% above current elevated levels,” Counterpoint said.
The rising price of components could be passed on to consumers and that will in turn, drive the rise in the average selling price.
Hwang said this will “play out especially” with Chinese smartphone makers who are in the mid-to-lower end of the market.
Counterpoint said some companies may downgrade components like camera modules, displays and even audio, as well as reusing old components. Smartphone players are likely to try to incentivize consumers to buy their higher-priced devices too.
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