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A global shortage of critical memory chips fuelled by the rapid build-out of artificial intelligence (AI) data centers is poised to raise smartphone prices worldwide and dampen shipment growth next year, according to new analysis from Counterpoint Research.
The warning comes as tech companies grapple with rising production costs, supply chain distortions, and intensifying competition for components once primarily reserved for consumer electronics.
At the center of the problem is dynamic random-access memory (DRAM) and NAND flash, essential components in both smartphones and high-performance AI servers.
Counterpoint Research says demand from AI data centers, particularly those running Nvidia-based systems, is consuming an unprecedented share of global memory output, leaving phone manufacturers scrambling for supply.
“The pressure from AI infrastructure buyers is now strong enough to distort the normal supply chain for consumer devices,” Counterpoint Research, in a market outlook note.
The research firm points to major memory producers such as SK Hynix and Samsung Electronics, whose advanced chips are increasingly directed toward AI workloads.
As a result, smartphone makers traditionally among the largest buyers of DRAM are finding themselves crowded out or forced to pay significantly higher prices.
This shift is expected to have direct consequences for consumers.
Counterpoint forecasts that average smartphone selling prices could rise by 6.9% in 2026, nearly double its earlier estimate of 3.6%. In practical terms, that translates to an estimated 8–10% increase in retail prices globally, depending on market and device category.
Prices Rise As Costs Ripple Through
The Competition from data centers forces device makers to pay more for DRAM and NAND flash Supply Chain
The impact of the memory shortage is already visible across the smartphone market, according to Counterpoint’s data. DRAM prices have surged throughout the year, pushing up the bill of materials (BoM) for devices at every price tier.
Low-end smartphones priced below $200 have been hit hardest. Counterpoint estimates their BoM has risen by 20% to 30% since the start of the year. Mid-range and high-end devices are not immune either, with material costs climbing by 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 Research, in the same report.
Because memory is a core component that cannot be easily substituted, manufacturers have limited options to absorb these increases. Many are expected to pass higher costs directly to consumers to protect already-thin margins.
Counterpoint also warns that the squeeze could affect product quality and innovation.
Some brands may downgrade components using lower-spec cameras, older audio hardware, or cheaper displays.
While others may recycle parts from previous models in new releases.
Another likely strategy is to steer buyers toward more expensive devices, where profit margins are easier to defend.
Beyond higher prices, the memory crunch is expected to weigh on global smartphone shipments. Counterpoint now projects a 2.1% decline in shipments in 2026, reversing earlier expectations of stable or modest growth.
While shipment data does not directly measure sales, it is widely used as a proxy for demand, tracking how many units manufacturers ship to retailers and distribution channels. A decline suggests brands are becoming more cautious, anticipating weaker consumer appetite as prices rise.
The timing adds to the pressure. Tech firms are already navigating higher production costs across multiple fronts, from components to logistics. The additional strain from memory shortages could further complicate planning and product launches over the next 12 to 18 months.
“Shipment data reflects how confident brands are about the market,” — Counterpoint Research, explaining its revised forecast. “Right now, that confidence is clearly under pressure.”
Not all smartphone makers will feel the pain equally. According to Counterpoint, industry giants Apple and Samsung are better positioned to weather the coming quarters, thanks to their scale, pricing power, and deeper supplier relationships.
“Apple and Samsung are best positioned to weather the next few quarters,” — MS Hwang, Research Director, Counterpoint Research.
By contrast, Chinese brands operating in the mid-to-low price segments face tougher trade-offs. With less room to raise prices without losing market share, these companies may struggle to balance profih
Hwang cautioned that the impact will “play out especially” among these players as rising material costs collide with intense competition and price-sensitive consumers.
The broader driver, however, shows no sign of slowing. Continued AI data-center expansion is pulling vast amounts of memory into high-end server systems, reinforcing the direct link between AI investment and consumer electronics pricing.
As long as AI infrastructure remains a top priority for tech giants, smartphone makers and buyers are likely to feel the effects.
For the general public, the message is clear: the next smartphone upgrade may come with a higher price tag, not because of flashy new features, but because AI’s behind-the-scenes appetite for chips is reshaping the global tech supply chain.
