Number of smartphones sold will fall in 2026 due to expected price increases driven by the AI hype

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Key takeaways

• The number of smartphones sold in 2026 is expected to fall by 2.1 percent as a result of rising prices.
• The average selling price of smartphones is expected to rise by 6.9 percent due to semiconductor shortages and higher DRAM chip costs.
• Smaller smartphone manufacturers may struggle to remain profitable as component costs rise, while larger brands such as Apple and Samsung are better positioned to adapt.

The growing demand for artificial intelligence (AI) is creating a ripple effect in the smartphone market, which could lead to price increases and fewer shipments in 2026.

Counterpoint Research forecasts a 2.1 percent decline in smartphone shipments that year, a break from earlier predictions of stable or positive growth. This reflects a drop in demand, as measured by the number of devices shipped to retailers.

Rising costs

The average selling price of smartphones is also expected to increase significantly, by 6.9 percent, compared with the earlier forecast of a 3.6 percent rise. That upward trend is being driven by shortages and bottlenecks in the semiconductor supply chain, which are pushing up component prices.

In particular, demand for DRAM (dynamic random access memory) chips used in AI data centers is outstripping supply, causing prices to rise this year. DRAM is also a key component in smartphones. Low-end smartphones priced below 170 euros have seen their total costs increase by 20–30 percent since the start of the year. Mid-range and high-end smartphones have experienced cost increases of 10–15 percent.

Further price hikes expected

Counterpoint predicts further price increases for DRAM, of up to 40 percent in the second quarter of 2026. This could lead to an additional rise of 8 to more than 15 percent in smartphone production costs. Those rising costs may be passed on to consumers, contributing to the expected increase in average selling prices.

While some companies may opt to downgrade components such as cameras or screens to keep costs in check, others may try to entice consumers to buy more expensive models. Counterpoint suggests that Apple and Samsung are in a better position to navigate this challenging landscape thanks to their dominant market position and pricing flexibility. Smaller players, particularly Chinese smartphone manufacturers focused on the mid-range and budget segments, may, however, face major difficulties in balancing their market share and profit margins. (fc)

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