The AI-Fueled Chip Shortage Could Raise Smartphone Prices: New Research Spells Out by How Much

The artificial intelligence revolution, while promising unprecedented advancements, is casting a long shadow over the consumer electronics landscape. Fresh research from Counterpoint Research, released on December 16, 2025, reveals a stark reality: the insatiable demand for memory chips from AI data centers is triggering a severe shortage, poised to drive smartphone prices up by 6.9% in 2026 while causing global shipments to contract by 2.1%. This marks a dramatic reversal from earlier forecasts of modest growth, highlighting how the AI boom’s collateral effects are rippling through supply chains and into consumers’ wallets.

At the core of this disruption lies dynamic random-access memory (DRAM) and NAND flash—essential components for both cutting-edge AI servers and everyday smartphones. As tech giants prioritize high-margin AI infrastructure, traditional consumer-grade memory supply tightens, inflating bill-of-materials (BoM) costs across the board. Low-end devices have already seen BoM surges of 20-30% since early 2025, with mid- and high-end models facing 10-15% hikes. Counterpoint warns that memory prices could climb another 40% through Q2 2026, potentially adding 8-15% or more to production expenses.

This AI-fueled chip shortage isn’t merely a transient blip; it’s a structural shift reshaping the smartphone market. While shipments may dip, the average selling price (ASP) is projected to reach new heights, pushing overall market value toward records despite fewer units sold. For consumers planning upgrades, the message is clear: expect pricier devices, potential spec compromises, and a more consolidated industry favoring premium players.

The Mechanics of the Shortage: AI’s Voracious Demand Meets Limited Supply

The roots of this crisis trace to the explosive growth in AI infrastructure. Data centers powering generative AI models require vast quantities of high-bandwidth memory (HBM) and advanced DRAM—far exceeding the needs of a single smartphone. Suppliers like Samsung, SK Hynix, and Micron have redirected capacity toward these lucrative AI chips, which offer margins up to ten times higher than commodity mobile memory.

This pivot has created acute bottlenecks for consumer-grade components. DRAM contract prices have skyrocketed 75%+ year-over-year in Q4 2025, with NAND following suit amid enterprise SSD demand. TrendForce reports prices in certain segments doubling since early 2025, while Counterpoint anticipates sustained elevations into 2026.

Nvidia’s influence exacerbates the strain: its shift toward smartphone-style LPDDR memory for efficient AI servers could double related prices by late 2026. Hyperscalers’ aggressive buildouts leave smartphone OEMs competing for scraps, forcing BoM inflation that manufacturers can’t fully absorb.

Quantifying the Impact: Revised Forecasts Paint a Challenging Picture

Counterpoint’s updated outlook downgrades 2026 shipments by 2.6 percentage points to a 2.1% decline—tens of millions fewer devices than 2025’s projected 1.25 billion. IDC echoes caution with a 0.9% dip, citing similar memory pressures alongside Apple’s base-model delay to 2027.

Yet revenue may soar: ASPs revised upward to +6.9% growth will elevate market value to ~$579 billion. Low-end (<$200) segments suffer most, with unsustainable margins prompting portfolio cuts. Mid-range faces camera/display compromises, while premium holds firmer.

Chinese OEMs—Honor, Oppo, Vivo—bear the brunt, with steeper shipment revisions. Production lines already reflect adaptations: downgraded memory configs, reused components, or discontinued models.

Differential Resilience: Winners and Losers in a Tight Market

Scale emerges as the decisive advantage. Apple and Samsung, per Counterpoint’s MS Hwang, are “best positioned” thanks to vertical integration, software optimization reducing memory dependency, and premium focus. Apple’s iOS efficiency and Samsung’s in-house memory production insulate them from the worst shocks.

Smaller Android brands, dominant in budget tiers, face existential pressures. Thin margins leave little room for absorption, risking spec regressions—like dropping to 4GB RAM bases—or market share erosion.

Consumer Consequences: Higher Costs, Diminished Value

For buyers, 2026 signals caution. Flagships may retain features at elevated prices (~$1,000+ averages possible), while entry/mid-range devices offer less: reduced storage, simpler cameras, or slower performance to offset costs.

Price-sensitive regions—India, Southeast Asia, Africa—see sharpest impacts, potentially prolonging upgrade cycles. On-device AI features, ironically hyped as differentiators, may underperform without ample memory.

Refurbished markets could boom as new devices strain budgets.

Pathways Forward: Adaptation and Long-Term Outlook

OEMs respond proactively: restructuring toward “Pro” variants, software enhancements for efficiency, and secured long-term supplier deals.

Relief hinges on new fabs (2027+), though AI demand’s trajectory remains bullish. If growth moderates, stabilization could arrive sooner.

Recommendations Amid Uncertainty

Consumers:

• Upgrade in late 2025 for pre-hike pricing.
• Favor premium brands for longevity.
• Explore refurbished/certified options.
• Extend current devices via maintenance.

Manufacturers:

• Accelerate software differentiation.
• Diversify beyond top suppliers.
• Communicate price rationale transparently.

Investors:

• Prioritize resilient leaders (Apple, Samsung).
• Monitor fab investments for recovery signals.

Conclusion: Balancing Innovation’s Costs

The AI-fueled chip shortage, as detailed in Counterpoint’s latest research, underscores a pivotal tension: groundbreaking technologies like generative AI demand resources that indirectly burden everyday consumers. With smartphone prices set to rise 6.9% amid a 2.1% shipment decline in 2026, the industry faces a reckoning—prioritizing profitability while preserving accessibility.

Apple and Samsung’s relative strength highlights strategic advantages, yet broader consolidation risks stifling competition. As supply chains evolve, informed decisions today—whether buying, building, or investing—will navigate this transition toward a potentially more efficient future post-2027.

The AI era promises transformation, but its path demands adaptation. Prepare accordingly, and the smartphone remains an empowering tool, even at a premium.