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The insatiable demand for more productive AI drives up the prices of computer parts, which can cause their prices to soar Smartphones Next year.
Years of cryptocurrency mining have pushed up the prices of computer parts like graphics cards. So it’s not surprising to see this trend continuing with the rise of generative AI and its constant need for more computing power.
What the consumer technology world did not expect was the increased demand for memory, which led to a narrow market for it Consumer RAM for computers In recent months. This ripple effect has extended beyond computing to impact the smartphone industry as well.
Instead of memory chips inserted into PC motherboards, smartphones use specialized RAM that has been miniaturized to fit on mobile phones. However, as memory production shifts to meet the demand for massive orders from data centers handling AI workloads, the AI rush is driving up the prices of all types of RAM.
This isn’t just a temporary mismatch in supply and demand — it could be a permanent shift in the world’s silicon chip capacity, according to Mid-December report From market information company International Data Corporation (IDC).
Phone makers have weathered the economic turmoil caused by the tariffs by absorbing costs, but analysts expect the story to be different in 2026, with cost increases likely to be passed on to consumers.
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“If the memory crunch comes, this is something that will hit the market hard, especially for (phone makers) who operate at the lower end where margins are very thin,” said Nabila Popal, senior research director at market intelligence firm International Data Corporation (IDC). “These sellers will have almost no choice but to pass the increased cost on to consumers.”
How much will phones cost next year? Low end for Cheap phones It is likely to experience the greatest fluctuations. Bhopal expects prices in this category to rise by at least 5-10%. This is because memory makes up between 15% and 20% of the material costs of inexpensive phones, which is a higher percentage than that of more expensive premium phones (about 10% to 15%), according to the latest IDC report.
In response, phone makers will shift their product mix toward the higher end, selling more expensive phones with higher profit margins, Bhopal predicts. This memory crisis has been devastating enough to change IDC’s forecast for average phone prices in 2026, swinging from a slight decline to a 2% increase. While this will likely lead to a decline in units shipped next year, the price increase is expected to push the overall smartphone market to a record high value of $578.9 billion, according to a new report. IDC report Released in early December.
Next year’s successors to phones like the iPhone 17 Pro Max and Samsung Galaxy S25 Ultra may not get more RAM for AI functions due to shortages.
As memory prices rise, phones may lose their RAM specifications
Aside from pushing up phone prices, the memory shortage could prompt phone makers to change course from increasing the amount of RAM in their product configurations to maintaining or even reducing it.
In the third quarter of 2025, more than 51% of smartphones shipped had at least 8GB or more of RAM, said Francisco Geronimo, vice president of client devices at IDC. This number rises to approximately 93% for phones priced at $400 or more.
“In 2026, entry-level and mid-range smartphones may return to 4GB RAM configurations to maintain price in price-sensitive markets,” Geronimo said.
The 8GB limit is important, because it’s almost a basic requirement for generative AI features to run on the device, like the Galaxy AI and photo features on the Google Pixel series. While phones can run hybrid, fully cloud-based general AI services, like ChatGPT, sending requests to and from data centers creates a time delay before people receive answers to their queries, and can’t be used when underground or out of cellular service.
The memory shortage has likely halted any plans to pack most premium phones with memory to boost AI performance, with 24GB RAM or higher configurations being phased out for the foreseeable future, Geronimo predicts. The upper limit for top-tier phones will likely be 16GB, and the “Pro” versions may drop to 12GB to protect margins and avoid price hikes.
The extent of the damage of these effects depends on the duration of the memory loss. But the shock to consumers’ wallets will likely cause them to wait longer to replace their phones, especially in parts of the world where phones are purchased in bulk. In markets like the US, where phones are more commonly purchased on two- to three-year installment plans, people won’t see a significant reduction in their monthly bills.