Global smartphone shipments expected to decline 15% in 2026 as rising memory prices driven by Artificial intelligence technology increases device costsaccording to research firm CCS Insight.
Some basic phones have seen their prices increase by more than 50% since last year. The primary smartphone market contracted 4.4% in the first quarter of 2026, even as carriers built up inventory, indicating that further declines are likely for the rest of the year.
Meanwhile, the used phone market is forecast to grow by 15%, as consumers increasingly turn to used devices to avoid higher prices on new models.
What is driving the rise in smartphone prices in 2026?
Steady demand for memory components driven by the development of AI infrastructure is the main reason behind the price increase.
Chipmakers have shifted their focus toward producing high-margin memory for AI servers, rather than standard DRAM and NAND used in PCs and smartphones.
This change differs from the typical memory market cycle, where prices typically increase due to supply shortages. Instead, the current pressure comes from demand, as hyperscalers use production capacity that would otherwise serve consumer devices.
Throughout this year, price pressure has steadily intensified:
- In January 2026, forecasts indicated that mobile phone prices could rise by 6 to 8 percent, with the worst-case scenario of a market contraction of 5.2 percent.
- By February 2026, projections had changed to about 14 percent price increases and about 8 percent declines in shipments.
- In June 2026, CCS Insight projected a total shipment decline of 15 percent 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. “Pressure is increasing on both manufacturers and consumers.
“The full effects are still playing out in many regions, but it is clear that device prices will continue to rise throughout the year.”
Budget devices are hardest hit because memory and storage account for a larger proportion of their total costs. Flagship phones can better withstand price increases, as features like high-quality cameras and displays account for a larger portion of their expenses.
Base models have less flexibility to absorb these cost increases without significant price increases, which explains the more than 50% increase seen in some models.
Used phone market grows as sales of new devices decline
The secondary market for used devices grew 4% in the first quarter as consumers looking for more affordable options turned to used phones. CCS Insight predicts this segment will expand 15% through 2026.
However, the supply in the used phone market faces some challenges. Replacement cycles have lengthened, with many consumers now keeping their devices for more than four years instead of the typical two. As a result, fewer sales of new devices lead to fewer trade-ins entering the used market.
“The secondary market has the potential to meet some of the demand that the primary market cannot meet,” Hatton said. “The main short-term challenge is to increase supply during this period when flagship device launches are scarce.”
Countries with established exchange programs are in a better position to expand their offering in the secondary market. Europe is expected to see slower growth in this area because less than a third of European consumers trade in or sell their old phones.
What this means for buyers and how long higher phone prices could last
If you plan to buy a new phone in 2026, expect prices to be noticeably higher than the previous year, especially for budget models.
To get the most out of your purchase, consider purchasing early in the year as prices are likely to continue rising. You can also look for refurbished or certified used devices, which are increasingly common. Keeping your current device longer aligns with the trend of extending replacement cycles.
Additionally, exploring mid-range or older flagship phones could offer better value than new budget devices, given current pricing trends.
The memory supercycle is expected to continue at least until 2028, based on current capacity allocations and AI infrastructure demand projections.
CCS Insight has not specified when memory prices might return to typical levels seen in consumer devices, but continued growth in AI infrastructure suggests prices are unlikely to drop anytime soon.
The factors that influence 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.
