AI Boom Drives Upcoming Smartphone Price Hikes

The global surge in artificial intelligence development is driving a shortage of critical memory components, threatening to raise prices for smartphones and personal computers in 2026. Reports from market intelligence firms indicate that manufacturers are diverting Random Access Memory (RAM) supplies to power energy-intensive AI data centers, leaving less available for consumer devices.

As supply tightens, costs are rising for manufacturers like Apple, Google, and Samsung. Analysts warn that these increased expenses will likely be passed on to buyers. Specifically, memory prices are projected to surge by up to 40%, potentially increasing the average selling price of smartphones by 6.9%. The shortage is expected to affect all market segments, though lower-end devices may face the most significant pricing pressure.

The manufacturing of Random Access Memory (RAM) is currently being reallocated to support the growing demands of AI technology. According to a December 2025 report, the production of memory used in devices like computers and phones is shifting toward AI data centers. These centers require substantial memory to process complex algorithms, competing directly with smartphone manufacturers for the same supply.

This shift is creating a bottleneck in the market. Just as a smartphone runs faster with more available memory, AI systems rely on robust memory to function effectively. As more companies integrate AI tools into their operations, the demand for reliable processing power increases, leading to a spike in RAM usage that the current supply chain is struggling to meet.

Market analysts are forecasting significant constraints on memory supply throughout the coming year. International Data Corporation (IDC) expects DRAM (Dynamic Random Access Memory) supply growth to fall below historical norms, projecting a year-on-year growth of only 16% in 2026.

Concurrently, market analysis firm Counterpoint offers a more aggressive outlook on pricing. Their research suggests that the price for memory could increase by 40% through the second quarter of 2026. This surge is critical because memory represents a significant portion of a device's total bill of materials, typically ranging from 10% to 20%. Counterpoint also projects a general slowdown in the industry, estimating that global smartphone shipments will decrease by 2.1% in 2026.

Smartphone manufacturers are facing a difficult choice as the cost of essential components rises. Nabila Popal, senior research director at IDC, described the situation as a looming "memory crisis" that will hit the market hard. She noted that vendors will have almost no choice but to pass the increased cost to consumers.

The impact will not be uniform across the industry. According to Yang Wang, a senior analyst at Counterpoint, larger manufacturers with a broad range of products are best positioned to weather the storm. However, lower-end markets will likely be hit the hardest. Wang noted that companies without enough "wiggle room" to manage market share versus profit margins will face tough challenges.

Despite the varying levels of impact, the overall trend points to higher prices. Counterpoint predicts that average selling prices will increase by 6.9%. For example, consumers looking to purchase the iPhone 17 Max base model could eventually pay closer to $1,281, up from the $1,199 price tag announced in 2025.

The intersection of the AI boom and consumer electronics manufacturing is creating a new economic pressure point. With RAM supplies shifting to support data centers, the era of affordable, high-spec memory for smartphones appears to be tightening. While industry giants like Apple and Samsung may navigate the shortage with greater ease, the broader market is bracing for price hikes that will ultimately affect the consumer's wallet.