Why smartphones may become more expensive in 2026

At the centre of the expected price increase is the rapid integration of on-device AI chips.

These processors are designed to run complex artificial intelligence tasks directly on smartphones without relying on internet connectivity.

As a result, devices are now capable of real-time language translation, image generation, advanced photo editing, voice assistance and predictive actions all performed offline.

While these capabilities represent a major technological leap, experts note that they come at a significant cost.

According to several industry reports by ‘Counterpoint Research’, including ‘Smartphone Shipment Forecasts Revised Down as Memory Shortage Drives BoM Costs Up’, ‘Memory Solutions for Gen AI’, and ‘Smartphone Processor (SoC) Market’, global smartphone shipments have been revised downward because it now costs far more to build a smartphone than previously anticipated.

Counterpoint further notes that while fewer smartphone processors are projected to be shipped in 2026, revenues from these chips are rising.

This is because manufacturers are increasingly adopting more powerful and expensive processors, particularly those designed to support artificial intelligence functions.

According to the reports, memory prices could rise by as much as 40 percent through the second quarter of 2026, pushing bill-of-materials costs between 8 percent and over 15 percent above already elevated levels.

As a result, global smartphone shipments are forecast to decline by about 2.1 percent in 2026, as higher prices begin to weigh on consumer demand.

At the same time, the rapid rollout of Generative AI features is pushing average selling prices higher, even as overall unit sales soften.

This shift is also expected to fuel growth in the refurbished smartphone market, as more consumers choose to hold on to older devices or purchase used phones rather than upgrading to newly released models.

Speaking to The Citizen, technology analyst Dominic Dismas said modern smartphones now offer far more than basic communication tools.

“Advanced cameras, high-quality displays, fast charging, strong security features and AI-powered functions have become the new standard,” he said.

Mr Dismas added that memory capacity and speed are increasingly critical, as they determine system smoothness and the ability to run multiple applications simultaneously.

“Generative AI is becoming one of the main reasons smartphones are getting much more expensive in 2026,” he said, explaining that unlike earlier innovations, Gen AI cannot simply be added through software updates.

“Cloud-based AI is cheaper because processing happens on servers, but offline Gen AI forces the phone itself to handle everything and that requires costly internal upgrades,” he explained.

On the retail side, smartphone sellers say the impact is already being felt.

According to online smartphone seller Bruno Almas said price increases are beginning to appear even in recently released models.

“This issue has started showing up early, even for phones that are already in the market,” he said, pointing to rising prices for devices such as the Samsung S25 Ultra, iPhone 17 Pro Max, OnePlus 13 and Xiaomi 17 Pro Max.

He attributed the trend to currency changes and rising wholesale prices.

“Some of these changes are linked to the strengthening of the Dirham and higher prices in wholesale phone markets,” he said.

Mr Almas added that reports circulating within the industry suggest rising RAM costs are a major driver behind the price increases.

“We are hearing that the increase in RAM costs is one of the main challenges, even causing prices of existing models to rise,” he said.

Another smartphone dealer in Makumbusho, Jumanne Rashid said the trend could significantly shift consumer behavior.

“There is a high chance that more people will move toward refurbished phones,” he said. “If prices continue to rise, demand for brand-new devices will drop while interest in used phones increases.”

He advised consumers not to rush into upgrading unless necessary.

“Sometimes it’s not important to change your phone. If your current device still does what you need, it’s better to keep it,” he said.

For wholesalers, the situation is equally concerning. Fatima Abdullatif, who runs a smartphone wholesale business, said the expected price increases are creating challenges for both retailers and customers.

“As sellers, we are already seeing the cost of importing devices rise, especially models with large memory and AI capabilities,” she said.

Ms Abdullatif added that many wholesalers are now being forced to rethink their business strategies.

“We may need to shift more toward refurbished devices compared to brand-new phones, because that’s where demand is likely to grow,” she said.

The expected price surge is not limited to premium smartphones alone. Even midrange and budget devices are likely to become more expensive in 2026, as manufacturers struggle with rising component costs.

Technology Company Nothing has already signalled that its smartphones will cost more next year due to the sharp increase in memory prices affecting the entire industry.

In a post shared on LinkedIn, Carl Pei, the company’s chief executive, said the pressure from rising memory costs is becoming difficult for manufacturers to absorb.

As smartphone makers continue to push advanced AI features into devices, analysts warn that higher prices may become the new normal reshaping how consumers buy, sell and use smartphones in the years ahead.