Anyone getting a new smartphone next year should prepare for additional phone costs and reduced availability.
As AI production continues to grow, a rising number of components used in AI production experience significant demand, leaving little for smartphone manufacturers.
Recent research, conducted and released by Counterpoint, predicted a 6.9% increase in the Average Selling Price of smartphones, nearly double the earlier estimated 3.6 percent hike. It also revealed that sales of smartphones would decline by 2.1% in the coming year
What is causing the high demand?
Dynamic Random Access Memory (DRAM) is an essential component in smartphones, enabling smooth multitasking and efficient operating system performance.
Demand for DRAM has surged as companies such as Nvidia, AMD, and Qualcomm rapidly build AI data centers, which require large amounts of memory for their chips. As supply struggles to keep pace with this growth, prices for these critical components have risen.
Nvidia, which many companies rely on for their underlying AI hardware needs, consumes a large amount of these DRAMs. This consumption has caused the price of DRAM to surge by 30% in the last quarter of 2025 and is expected to rise by an additional 20% in early 2026.
How does all this translate for smartphone makers?
This economic shift would be consequential for smartphone production, as original equipment manufacturers (OEMs) will eventually have to increase prices while reducing the overall supply of phones in 2026.
However, the impact of rising DRAM costs and supply constraints is unlikely to be felt immediately in early 2025, particularly among major smartphone manufacturers such as Apple and Samsung, which have the market leverage and financial resources to absorb short-term cost pressures, at least until later in the year.
But smaller companies would likely be the first to feel the weight of this imbalance.
For these smaller companies that often produce mid-range to lower-end phones, they’d either have to switch to DRAM alternatives or reduce the quality of other components, like those used in phone displays, audio parts, and even body and camera components. They may as well improvise by having to sell phones with older components.
What the future looks like for smartphone brands
Looking beyond 2026, smartphone brands may have to switch to other DRAM alternatives to keep supply stable.
People may want to stick with their old phones for longer periods instead of spending more for a bit less. This is the more plausible, foreseeable route, as AI production doesn’t seem to be slowing down. As more money continues to be pumped into it, these data centers are better positioned to keep the limited components to themselves.
However, in a fast-paced and uncertain industry, things could change suddenly… for better or worse.
For a broader look at what’s coming next, see TechRepublic’s expert predictions for how AI and other forces will shape the tech industry in 2026.
