According to research firm CCS Insight, global smartphone shipments are expected to decline 15% in 2026 as rising memory prices driven by AI technology will drive up device costs.
Some entry-level phones have seen prices increase by more than 50% from last year. The primary smartphone market declined 4.4% in the first quarter of 2026, despite carriers accumulating stock, indicating further declines are likely in the remainder of the year.
Meanwhile, the used phone market is projected to grow by 15%, as consumers increasingly turn to pre-owned devices to avoid higher prices on new models.
What is the reason for smartphone price increase in 2026?
The ongoing demand for memory components driven by the development of AI infrastructure is the main reason behind rising prices.
Chip makers have focused on making higher-margin memory for AI servers instead of the standard DRAM and NAND used in PCs and smartphones.
This change is different from the typical memory market cycle, where prices typically rise due to a lack of supply. Instead, the current pressure is generated by demand, with hyperscalers using production capacity that would otherwise serve consumer devices.
Throughout this year, pricing pressure has continued to increase:
- In January 2026, forecasts indicate that handset prices could rise by 6 to 8 percent, with a worst-case scenario leading to a 5.2 percent market contraction.
- By February 2026, the estimate had shifted to about 14 percent price growth and about 8 percent decline in shipments.
- In June 2026, CCS Insight projected a 15 percent decline in total shipments for the year.
According to CCS Insight analyst Ben Hatton, memory components now make up more than 30 percent of the bill of materials in some smartphones.
“The memory chip crisis shows no signs of slowing down anytime soon,” Hatton said. “This is increasing pressure on both manufacturers and consumers.
The full impact is still unfolding in many regions, but it is clear that device prices will continue to rise over the course of the year.”
Budget devices are most affected as memory and storage make up a large portion of their total cost. Flagship phones can handle the price increase better because features like high-quality cameras and displays make up a larger portion of their expenses.
Entry-level models have less flexibility to absorb these cost increases without significant price increases, which explains the increases of more than 50% seen on some models.
The market for used phones is growing with the increase in sales of new devices.
The secondary market for used devices grew 4% in the first quarter as consumers looking for more affordable options turned to pre-owned phones. CCS Insight estimates that this segment will expand by 15% by 2026.
However, supply in the used phone market faces some challenges. Replacement cycles have become longer, with many consumers now holding on to their devices for more than four years instead of the usual two. As a result, fewer new device sales lead to less trade-in entry into the used market.
“The secondary market has the ability to meet some of the demand that the primary market cannot meet,” Hatton said. “The main challenge in the near term is to increase supply during this period when flagship device launches are rare.”
Countries with established trade-in programs are better positioned to expand their secondary market supply. Europe is expected to see slow growth in this sector as less than a third of European consumers trade in or sell their old phones.
What does this mean for buyers, and how long can high phone prices last?
If you’re planning to buy a new phone in 2026, expect prices to be significantly higher than a year ago, especially for budget models.
To get the most from your purchase, consider purchasing early in the year, as prices are likely to keep rising. You can also look into certified refurbished or pre-owned equipment, which are becoming more common. Holding on to your current device longer is in line with the trend of increasing replacement cycles.
Additionally, given current pricing trends, exploring mid-range or older flagship phones may provide better value than newer budget devices.
The memory supercycle is expected to continue until at least 2028, based on current capacity allocations and projections for demand for AI infrastructure.
CCS Insight did not specify when memory prices might return to normal levels seen in consumer devices, but the ongoing growth in AI infrastructure suggests that price relief is unlikely in the near term.
The factors that affect phone prices also affect PCs and other devices that rely on DRAM and NAND memory. As a result, users can expect similar pressure on laptop and desktop prices for the rest of this year and into 2027.
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