Leading executives from Xiaomi and Realme, alongside prominent research firms, are issuing a stark warning to consumers: smartphone prices are poised for a significant increase in 2026. What exactly is driving this impending surge?
The projected rise in smartphone prices in 2026 is primarily attributed to the escalating costs of crucial components such as chips and memory. Technology market research firm Counterpoint Research forecasts a substantial 30% hike in memory prices by the fourth quarter of 2025, with a further potential increase of 20% by early 2026.
This trend signifies a deepening crisis within the industry, marked by an unprecedented 50% rise in chip prices since the beginning of the year, as reported by Red94 on Wednesday (10/12).
For instance, Samsung has already implemented memory chip price increases ranging from 30% to 60% as of November, according to sources quoted by Reuters. Concurrently, TrendForce reported a staggering 60% jump in contract demand for NAND Flash during the same month.
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NAND Flash is a type of non-volatile memory, meaning data is retained even when power is off, utilized for permanent data storage. This technology forms the bedrock of modern storage solutions such as SSDs, memory cards, and flash drives, storing vast amounts of data in cells like SLC, MLC, TLC, and QLC with high capacities.
The surge in chip prices is predominantly fueled by the escalating demand for advanced AI technologies. These cutting-edge AI solutions require immense and sophisticated memory capacities, triggering a global explosion in chip demand.
Consequently, the entire electronics supply chain is experiencing significant repercussions. Major manufacturers, including Samsung, are strategically reallocating memory production away from consumer smartphones to prioritize the burgeoning needs of AI infrastructure.
This critical supply shortage extends to both DRAM and NAND Flash memory, effectively eliminating any feasible component replacement options and exacerbating the overall scarcity.
SK Hynix, a prominent South Korean memory manufacturer, projects that these severe supply constraints will persist until late 2027, indicating that the crisis will extend well beyond the initial 2026 forecast.
Telecommunications industry analysts anticipate the most significant price hikes to materialize by mid-2026, coinciding with the activation of new production contracts, as also cited by Red94 on Wednesday (10/12).
Manufacturers currently bound by long-term agreements negotiated prior to the supply crunch will begin to feel the full brunt of these increased costs during the second and third quarters of 2026.
Both International Data Corporation (IDC) and Counterpoint Research have issued warnings that the average selling price of smartphones will see a significant upward trend throughout the first half of next year.
Specifically, the average selling price for smartphones is projected to reach US$465 (approximately IDR 7.75 million at an exchange rate of IDR 16,680 per US$) in 2026, up from US$457 (IDR 7.6 million) in 2025. This projection comes from Nabila Popal, Senior Research Director at IDC, as quoted by CNN on Wednesday (10/12).
Xiaomi President Lu Weibing emphasized that cost pressures on smartphone production are set to intensify significantly next year. He stated, “I anticipate cost pressures to be much heavier next year compared to this year,” according to a Qoo10 report from November 24.
Francis Wong, Global Product Marketing Head at Realme, acknowledged that the semiconductor industry is accustomed to grappling with price fluctuations as new technologies emerge. However, he noted, they were largely unprepared for the sheer speed and scale of AI demand this time around. Wong told CNN on Wednesday (10/12), “In the semiconductor sector, there will always be a mismatch (between supply and demand),” adding, “This is somewhat beyond expectations.”
Furthermore, as reported by 91Mobiles, Francis Wong pinpointed the primary drivers behind the 2026 smartphone price increases: the rising costs of NAND Flash, DRAM, and SSD components, which are integral to every gadget’s storage and memory.
DRAM, or Dynamic Random Access Memory, is a volatile memory type where data is lost when power is cut. It serves as the main RAM for computers and servers, essential for rapid data processing.
Conversely, an SSD, or Solid State Drive, is a NAND Flash-based storage device that has largely replaced traditional hard disk drives. SSDs utilize a sophisticated controller and NAND chips to store data, offering significantly faster performance.
These crucial components are experiencing continuous price hikes, driven by increasingly tight supply and intensified competition for chips amidst the burgeoning AI trend.
The AI trend is fundamentally fueling demand for high-end memory. Components traditionally allocated for smartphones and laptops are now being rigorously prioritized for AI data centers, servers, and high-bandwidth computing applications.
Chip manufacturers have consequently shifted production capacity from standard smartphone-grade DRAM and NAND to more specialized, enterprise-grade memory, such as HBM (High Bandwidth Memory).
This strategic shift directly impacts smartphone prices across the board. Wong emphasized to 91Mobiles on November 27, “This is an industry-wide issue; no brand can avoid it.”
The situation is further compounded by ongoing geopolitical trade tensions, continuous recalibrations of global supply chains, and persistent currency fluctuations. As nations tighten technology export regulations and diversify their manufacturing hubs, production costs are inevitably climbing, accompanied by extended lead times for vital components.
Summary
Smartphone prices are expected to increase significantly in 2026, primarily due to escalating costs of crucial components like chips and memory, specifically NAND Flash and DRAM. Counterpoint Research projects a 30% rise in memory prices by Q4 2025, with an additional 20% increase by early 2026, while chip prices overall have already climbed 50%. This surge is largely driven by the exploding demand for advanced AI technologies, which require immense and sophisticated memory capacities.
Consequently, major manufacturers such as Samsung are reallocating memory production from consumer smartphones to prioritize AI infrastructure, leading to a critical supply shortage of DRAM and NAND Flash. Industry analysts anticipate the most substantial price hikes by mid-2026, with supply constraints potentially extending until late 2027 according to SK Hynix. Executives from Xiaomi and Realme confirm this industry-wide issue, projecting the average selling price of smartphones to reach US$465 in 2026.
