Global smartphone shipments are expected to decline by 15% in 2026 as increasing memory prices driven by AI technology push up device costs, according to research firm CCS Insight.
Some entry-level phones have seen their prices rise by over 50% since last year. The primary smartphone market shrank by 4.4% in the first quarter of 2026, despite carriers stockpiling inventory, indicating further declines are likely for the rest of the year.
Meanwhile, the used phone market is projected to grow by 15%, as consumers increasingly turn to pre-owned devices to avoid higher prices on new models.
What’s Driving Smartphone Price Increases in 2026
The ongoing demand for memory components driven by AI infrastructure development is the main reason behind rising prices.
Chipmakers have shifted 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 usually increase due to supply shortages. Instead, the current pressure stems from demand, with hyperscalers utilizing production capacity that would otherwise serve consumer devices.
Throughout this year, pricing pressure has steadily intensified:
- In January 2026, forecasts indicated handset prices could rise by 6 to 8 percent, with a worst-case scenario of a 5.2 percent market contraction.
- By February 2026, projections had shifted to roughly 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 sign of slowing down any time soon,” Hatton said. “It is increasing pressure on both manufacturers and consumers.
The full effects are still unfolding in many regions, but it’s clear that device prices will continue to rise over the course of the year.”
Budget devices are hit hardest because memory and storage make up a larger share of their overall costs. Flagship phones can handle price increases better since features like high-quality cameras and displays account for a bigger part of their expenses.
Entry-level models have less flexibility to absorb these cost increases without significant price hikes, which explains the more than 50% jump seen on some models.
Used Phone Market Grows as New Device Sales Slide
The secondary market for used devices grew by 4% in the first quarter as consumers looking for more affordable options turned to pre-owned phones. CCS Insight predicts this segment will expand by 15% across 2026.
However, supply in the used phone market faces some challenges. Replacement cycles have lengthened, with many consumers now holding onto their devices for more than four years instead of the typical two. As a result, fewer new device sales 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 fulfill,” said Hatton. “The main challenge in the near term is increasing supply during this period when flagship device launches are scarce.”
Countries with established trade-in programs are in a better position to expand their secondary market supply. 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’re planning to buy a new phone in 2026, expect prices to be noticeably higher than they were a year earlier, especially for budget models.
To make the most of your purchase, consider buying earlier in the year, as prices are likely to keep going up. You might also look into certified refurbished or pre-owned devices, which are becoming more common. Holding onto 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 the current pricing trends.
The memory supercycle is expected to continue through at least 2028 based on current capacity allocations and projections for AI infrastructure demand.
CCS Insight has not specified when memory prices might return to typical levels seen in consumer devices, but ongoing growth in AI infrastructure suggests that relief in prices is unlikely in the near term.
The factors influencing phone prices also affect PCs and other devices that depend 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.
