Phones are getting more expensive, and for once the explanation has almost nothing to do with the badge on the back. It is happening across every brand at once, it started a long way upstream, and the people who will feel it hardest are the ones buying the cheapest phones.
Five of the biggest research houses in the industry have now published on it. They disagree about the size of the effect. They do not disagree about the direction. Here is what the numbers actually say.
Table of Contents
The one chart that explains the whole story
The memory inside a phone, the RAM it thinks with and the flash it stores your photos on, used to be a dull line on a bill of materials. It is now the most expensive thing in the device.
The processor and the display used to be the expensive parts of a phone. They are not any more. Close to half the cost of building a high-end handset is on its way to being memory, and no amount of clever engineering removes it, because a phone with less memory is simply a worse phone.
How fast it moved
This did not creep. Prices came close to doubling in a single quarter, twice, in the memory types phones actually use.
Contract prices do not reach a shop shelf immediately. They feed into finished products one to two quarters later, which is exactly why the effect is landing on retail prices now, in the second half of 2026, rather than back when the charts first moved.
Why it happened: your phone is bidding against a data centre
This is not a shortage caused by a fire, a flood or a trade dispute. It is demand, and it came from somewhere else entirely.
The build-out of artificial intelligence data centres has absorbed an enormous share of the world's memory production. Omdia names it directly as a downside risk to the whole phone market: if memory prices stay elevated because AI server demand keeps competing for the same manufacturing capacity, global smartphone shipments could fall by more than 15 per cent this year.
The people making the memory are blunt about it. SK Hynix chief executive Kwak Noh-jung told Reuters in July that "our customer demand continues to go up, while our capacity has limitations".
So the phone in your pocket is competing with a server rack for the same components, and it is losing.
Cheap phones are where this really hurts
If you buy flagships, this is an irritation. If you buy the cheapest phone that works, it is closer to an eviction.
Read that again slowly. The memory alone now costs five times what it did, and more than the entire phone used to cost to build.
"It is impossible to manufacture smartphones below US$100 at the moment."
Jusy Hong, Senior Research Manager, Omdia
IDC reaches the same place from its own modelling, and puts it more bluntly still: phones under 100 US dollars could become permanently uneconomical. That is not a forecast about the distant future. It is a description of a shelf that is quietly emptying.
And the market is not shrinking evenly. It is shrinking from the bottom.
The most expensive phones in the world are the only ones growing, because the people who buy them can absorb a price rise and the brands that make them have room to move. Everyone below that is being squeezed out of the market by arithmetic.
What the big forecasters actually say
They do not agree on the magnitude. They agree on everything else.
| Research house | Shipments in 2026 | Effect on prices | Their framing |
|---|---|---|---|
| IDC | Down about 13%, to roughly 1.12 billion units, the lowest in more than a decade | Average selling price to a record US$523, up 14% | A structural reset of the entire market |
| Gartner | Down 8.4% | Smartphone prices up about 13% against 2025, on a 130% rise in DRAM and SSD prices | The steepest device contraction in over a decade |
| Omdia | Down about 7% for the full year, and already down 6% in Q2 2026 to 272.0 million units | Entry tier repricing fastest, premium tier still growing | A structural repricing of the industry |
| TrendForce | Not forecast in this release | Android price increases steeper than iPhone | Memory passes 40% of build cost by 2027 |
"This is not a temporary squeeze. It is a tsunami-like shock."
Francisco Jeronimo, Vice President of Worldwide Client Devices, IDC
It is already visible in what people are buying
Omdia reported global shipments down 6 per cent year on year to 272.0 million units in the second quarter of 2026. Underneath that average, the cheap end took the damage: Xiaomi, which ships more than half its phones at under 200 US dollars, was down 26 per cent.
"Price is once again becoming a competitive differentiator. The current memory cost cycle is driving a structural repricing of the industry, creating a lasting shift in how vendors compete on pricing, profitability and product positioning."
Le Xuan Chiew, Research Manager, Omdia
Omdia also noted something that explains why some brands are coping better than others: vendors that manufacture their own memory are partly insulated, because they are not entirely at the mercy of the contract prices everyone else is paying. That is a structural advantage with nothing to do with how good the phone is, and it will shape which brands come through this cycle in good health.
Where it is hitting hardest, by region
| Region | 2026 forecast |
|---|---|
| Middle East and Africa | Down 20.6% |
| Asia-Pacific excluding China and Japan | Down 13.1% |
| China | Down 10.5% |
That middle row is us. Markets where a large share of sales sit in the affordable tiers lose the most volume, because that is exactly the part of the range this cost increase makes unbuildable.
What this means if you are buying a phone in Malaysia
Four practical things follow from the numbers above.
The entry shelf thins out before the flagship shelf does. The arithmetic that makes a sub-100 dollar phone unbuildable is the same arithmetic that makes the cheapest end of the Malaysian market the first place models quietly disappear, or reappear with less storage at the same price.
Watch the specification, not just the price tag. One standard response to a component squeeze is to hold the price and cut the memory. A phone that costs the same as last year but ships with half the storage has had a price increase. It just is not printed on the box.
Buy the storage you need now rather than upgrading later. Paying up one tier at purchase has rarely looked better value than it does this year, because the gap between tiers is set by a component whose price is still climbing.
If your phone still works, this is a reasonable year to keep it. That is essentially what Gartner expects most people to do, and it is not bad advice.
"Higher prices will narrow the range of devices available, prompting buyers to hold on to devices for longer, fundamentally altering upgrade cycles."
Ranjit Atwal, Senior Director Analyst, Gartner
When does it end
Honestly, not soon. New memory capacity requires new fabrication plants, and those are measured in years, not quarters.
| Who | What they expect |
|---|---|
| IDC | Memory prices stabilise by the middle of 2027, but are unlikely to return to previous levels |
| TrendForce | Memory passes 40% of a flagship's build cost in the first half of 2027, higher than today, not lower |
| SK Hynix | 2027 will be the worst year in the industry's history for supply, with demand above capacity beyond 2030 |
"We forecast that next year will be the worst year in the industry's history from the supply perspective. We still forecast that customer demand will remain higher than our supply capacity even beyond 2030."
Kwak Noh-jung, Chief Executive, SK Hynix, to Reuters
The useful way to think about the next eighteen months is this. Phone prices are not being set by phone companies right now. They are being set by how fast the world can build memory, and by who is willing to pay the most for it. For the moment, that is not us.
Every figure in this article comes from published research by TrendForce, Counterpoint Research, Omdia, IDC and Gartner, or from reported remarks by named executives, and each is linked at the point of use. The photographs illustrating this article are generated images and depict no specific product.
