AI hype threatens to make smartphones more expensive
The explosive growth of artificial intelligence is becoming increasingly tangible beyond the tech sector. According to a new analysis by Counterpoint Research, the impact will also hit the smartphone market, leading to higher prices and fewer shipments.
Counterpoint Research expects the number of smartphone shipments in 2026 to fall by 2.1%. That’s striking, as earlier forecasts were still pointing to a stable market or even slight growth. This concerns the number of devices manufacturers ship to retailers and distributors, a key indicator of consumer demand.
That decline suggests the market is coming under pressure, despite ongoing innovations and new features that manufacturers are using to try to win over consumers.
In addition to lower volumes, Counterpoint is also forecasting a sharp increase in the average selling price of smartphones. That price is set to rise by 6.9%, almost double the previously expected 3.6%.
The main cause lies in the semiconductor industry. Soaring demand for chips for AI applications in data centres is creating bottlenecks in the supply chain. DRAM memory in particular, which is crucial not only for AI systems but also for smartphones, has become scarce and therefore significantly more expensive.
The rising component prices are being felt most acutely in the lower end of the market. Since the beginning of this year, smartphones with a retail price below €170 have seen their production costs increase by 20-30%. In the mid-range and premium segments the damage is more limited, but even there costs are rising by 10-15%.
According to Counterpoint, smaller manufacturers are especially vulnerable, as they have less room to absorb higher costs without eating into their margins.
The end of the price increases does not appear to be in sight. Counterpoint expects DRAM prices in the second quarter of 2026 to be up to 40% higher. That could push smartphone production costs up by a further 8% to more than 15%.
As a result, manufacturers face difficult choices. Some will try to cut costs by, for example, using cheaper cameras or displays. Others will instead double down on more expensive models and try to persuade consumers to pay more.
According to Counterpoint, market leaders such as Apple and Samsung are in a relatively comfortable position. Thanks to their scale, strong brands and pricing flexibility, they are better able to absorb the impact of higher costs.
It is mainly smaller players, particularly Chinese manufacturers that focus on the mid-range and budget segments, that are likely to struggle. They have to strike a balance between competitive prices, falling demand and profitability in a market that is coming under increasing pressure.
Newsmonkey
Subscribers 0
Fans 0
Followers 0
Followers