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.
Four of the biggest research houses in the industry have now published on it, and they disagree about the size of the effect but not about its 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. It doubled, twice, inside six months.
TrendForce measured the same shock from a different angle, and found the average selling price of LPDDR5X, the memory used in current flagship phones, rose 78 to 83 per cent in a single quarter in Q2 2026.
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. Counterpoint points to three compounding causes: the pace of AI data centre construction, the fact that the high bandwidth memory used in AI accelerators consumes roughly three times the manufacturing capacity of the ordinary memory it displaces, and cleanroom construction lead times now measured in years rather than months.
The supply side simply cannot respond quickly, and the numbers show it.
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.
What the four 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 | "The lowest level of device shipments witnessed in over a decade" |
| Omdia | Already down 6% year on year in Q2 2026, to 272.0 million units | Entry tier repricing fastest | "A structural repricing of the industry" |
| TrendForce | Not forecast in this release | Android 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
The market has started to move, and the shape of the movement tells you who is absorbing this. Omdia reported global shipments down 6 per cent year on year to 272.0 million units in Q2 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
Gartner expects buyers at the basic end of the market to leave it roughly five times faster than buyers at the premium end. In other words, the market is not shrinking evenly. It is shrinking from the bottom.
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 are the ones that lose the most volume, because that is exactly the part of the range the 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 of the standard responses 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.
| Facility | Volume production expected |
|---|---|
| New Micron and SK Hynix capacity | 2027 at the earliest |
| SK Hynix M15X | Around the middle of 2027 |
| Samsung P5, Pyeongtaek | 2028 |
IDC expects memory prices to stabilise by the middle of 2027, while cautioning that they are unlikely to return to previous levels. The supply side is gloomier still: SK Hynix chief executive Kwak Noh-jung has said 2027 will likely be the worst year in the industry's history from a supply perspective, and expects demand to outrun capacity beyond 2030.
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.
All figures in this article are drawn from published research by TrendForce, Counterpoint Research, Omdia, IDC and Gartner, and are linked at the point of use. The photographs illustrating this article are generated images and depict no specific product.
