If you are thinking of upgrading from your old phone to a new one in the next year or two, it may be beneficial to buy a new phone now in 2025, as recent reports suggest that smartphone prices may increase next year, and the reason behind this is Artificial Intelligence. According to new research from Counterpoint, the increasing demand for AI infrastructure is having an impact on consumers. As data centers increasingly use up critical components, the pressure on smartphone makers is increasing, production costs are rising, and prices will almost certainly increase. At the root of this problem lies a small but essential component: memory.
How much will prices increase?
Counterpoint expects the average selling price of smartphones worldwide to increase by 6.9 percent in 2026, much higher than previously estimated. As always, these rising costs will directly impact consumers. This impact will not be the same for all brands; Industry giants like Apple and Samsung are in a better position to face this challenge. Smaller manufacturers, especially those that focus on mid-range and budget devices, will face more difficulties.
Next-generation smartphones and advanced AI servers rely heavily on the same types of memory chips, especially DRAM. These chips are vital to handling tough tasks, whether it’s running a powerful AI model in a server rack or keeping your phone responsive while switching between apps, games, and photos. The problem is that AI data centers, especially those running on advanced Nvidia-based systems, are much more profitable for memory suppliers than smartphones. As global investment in AI grows, manufacturers are prioritizing these higher-margin customers, leaving fewer chips available for consumer electronics. The result is that the supply is decreasing and prices are increasing rapidly. The situation may worsen by 2026.
Counterpoint’s analysts caution that this imbalance is not temporary. In fact, the situation may get worse by 2026. Memory prices are expected to increase by as much as 40 percent in the first six months of that year, putting even more pressure on smartphone production costs.
This increase is already reflected in the “Bill of Materials, or BoM,” which is the total cost of the components needed to build a phone. Budget devices priced under $200 (approximately ₹18,064) have been hit the most, with production costs rising 20 to 30 percent in just one year. Mid-range and premium phones have also not remained untouched by this, their production cost has also increased by 10 to 15 percent.