Thanks AI! Smartphone Prices Could Rise By Up To 8% Due To AI Chip Demand, Says Analyst

Thanks AI! Smartphone Prices Could Rise by up to 8% Due to AI Chip Demand, Says Analyst

Last updated: 2025/12/27 at 9:53 AM

News Room Published 27 December 2025

If you’re interested in buying a budget-conscious, lower-end Android smartphone in 2026, particularly from value-focused manufacturers like Xiaomi or Oppo, industry analysts have some bad news.

A new report from IDC predicts that the immense pressure on DRAM production, an essential ingredient in all smartphones, is set to continue in 2026. Due to the AI boom, chip production that would otherwise have gone to smartphones, PCs, or other consumer electronics is now increasingly going to fuel AI data centers.

IDC thinks that smartphone average selling prices could rise by 3% to 5% in the moderate scenario, or by 6% to 8% in its pessimistic scenario. IDC thinks that the total smartphone market could contract by 2.9%, while in its pessimistic downside scenario, it could contract by as much as 5.2%.

The trend is predicted to hit low-end manufacturers the hardest—for example, vendors such as TCL, Transsion, Realme, Xiaomi, Lenovo, Oppo, Vivo, Honor, or Huawei. As these vendors generally operate with fairly low margins, IDC believes they will have “no choice” but to pass the costs on to consumers.

Meanwhile, if you’re more interested in opting for a higher-end smartphone such as an Apple or Samsung model, you may be somewhat insulated against the negative impacts of the AI chip boom. IDC notes that Apple and Samsung have large cash reserves and long-term supply agreements that will allow them to secure their memory supply 12 to 24 months in advance.

On the other hand, both smartphone giants will likely hold off from giving their new flagship models RAM upgrades in 2026, opting to stick to 12GB for their Pro models rather than increasing to 16GB. In addition, IDC thinks the current flagship Apple and Samsung models will fail to see previous levels of price erosion after the introduction of the new-generation models.

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The AI chip demand boom is predicted to spare few victims in the consumer technology space, with the PC market also set to be hit hard. IDC thinks that PC average selling prices may rise by 4% to 6% in its moderate scenario, and by up to 6% to 8% in its pessimistic scenario. The largest vendors, with the highest overall sales, are likely to be the best insulated from rising RAM prices, while smaller, regional “white box” vendors are likely to be hit the hardest.

Console gamers are also set to feel the negative impacts of the AI boom. Nintendo-focused analysts predicted earlier this month that spiraling DRAM prices could mean high production costs for Switch 2 cartridges will continue to limit which games see a fully physical release.