If your next phone seems to cost more than your last one, you are not imagining it. Smartphone prices rising in 2026 is one of the biggest stories in the industry, and the cause has very little to do with phones.
The culprit is memory. The RAM and storage chips inside every phone have become dramatically more expensive, and AI is the reason.
Here’s what is happening, why it hits budget phones hardest, and what it means if you are planning to buy a phone in India this year.
The Short Version
Memory chip prices have risen nearly four times since September 2025, according to Counterpoint Research. That pushed the average price of a smartphone up by around 15 percent by the end of June 2026.
At the same time, fewer people are buying phones. Counterpoint expects India’s smartphone market to shrink 13 percent this year.
Why Memory Suddenly Costs So Much
AI data centers are buying everything
Every AI service you use, from ChatGPT to Gemini, runs on huge data centers packed with specialised chips. Those chips need enormous amounts of fast memory.
The companies that make memory, mainly Samsung, SK Hynix and Micron, earn far more selling to AI data centers than to phone makers. So they have shifted their factories toward high-bandwidth memory for AI and away from the kind of memory that goes into phones and laptops. Research firm IDC now calls it a global memory shortage crisis.
The result is simple supply and demand. Less memory is being made for phones, and phone makers are competing with AI giants for what is left.
The numbers are extreme
DRAM contract prices, which is what brands pay for RAM, jumped 90 to 95 percent in just the first three months of 2026. Market research firm TrendForce expected another 58 to 63 percent rise in the following quarter, with storage chips rising 70 to 75 percent.
Price jumps like that in a single quarter are very unusual. Chips normally get cheaper over time, not more expensive.
Why Budget Phones Are Hit Hardest
This is the part that matters most for India. Analysts warned back in January that budget phones would take the biggest hit, and that is exactly what happened.
In a mid-range phone, memory now makes up more than 20 percent of the total cost to build it, up from roughly 10 to 15 percent in earlier years.
In cheap phones, the share is far higher. Memory accounted for nearly 60 percent of the component cost of phones priced under $400 in early 2026.
A premium phone can absorb a more expensive memory chip. A Rs 9,000 phone cannot, because the memory is a large part of what you are paying for.
The cheapest phones are disappearing
The effect in India has been dramatic. Shipments of phones under $100, roughly the under Rs 10,000 segment, fell 74.3 percent in the June quarter. That segment’s share of the market dropped from 15.6 percent to just 4.5 percent.
Brands are not stopping budget phones because nobody wants them. They are stopping because they can no longer make them cheaply enough to sell at that price.
Meanwhile, Mid-Range Phones Are Growing
Here is the surprising twist. While the cheapest phones collapsed, the $400 to $600 segment grew 60.3 percent year on year, and its market share rose from 4.8 percent to 8.6 percent.
Part of this is buyers stretching their budgets because a good cheap phone is harder to find. Part of it is brands pushing people toward models where they can still make money despite memory costs.
Either way, the result is the same. The average Indian phone buyer is spending more.
Fewer People Are Buying
Higher prices mean fewer upgrades. India’s shipments fell 10 percent in the June quarter, the steepest June-quarter drop in six years, according to Counterpoint.
IDC is even more cautious. It expects shipments to fall more than 15 percent in the second half of 2026, taking full-year volumes down to around 128 to 130 million phones, from 152 million in 2025.
That is more than 20 million fewer phones sold in a single year.
What This Means If You Are Buying a Phone
Don’t wait for prices to drop
If you need a phone now, waiting probably will not save you money. Memory makers have warned that the shortage could last for years, and some forecasts stretch it toward the end of the decade.
Look at last year’s models
Phones launched in 2025 were built before memory prices exploded. Many are still on sale, and they often offer better value than a similar new model with the same specs and a higher price tag. Older flagships also get real price cuts, as the Nothing Phone 3 did in India. If battery life matters most, our list of the best smartphones for battery life is a good place to start.
Watch the RAM and storage figures
To protect prices, some brands quietly cut memory instead of raising the price. A new phone that costs the same as last year’s may come with less RAM or less storage. Always compare the full specs, not just the price.
Expect fewer launch discounts
Brands have less room to cut prices during sales. Big festive discounts may still happen, but they are likely to be smaller than you are used to.
Are Apple and Samsung Prices Affected Too?
Premium phones are not immune, just less affected. Foldables were already the most expensive phones you can buy, as we saw with Samsung’s foldable push and Apple’s first foldable, the iPhone Duo. The iPhone 18 Pro and 18 Pro Max launched at higher prices than the previous models, as we covered in our iPhone 18 Pro breakdown.
Memory is only one part of those price decisions, though. For a Rs 1.3 lakh phone, a more expensive memory chip is a small slice of the total, so higher flagship prices also reflect new hardware, currency movement and Apple’s own pricing strategy. Google’s Pixel 11 series shows the same pattern of creeping flagship prices.
The Bottom Line
Smartphone prices rising in 2026 is not a temporary blip or brands being greedy. It is the phone industry paying the bill for the AI boom, because the same memory chips are now wanted by far richer customers.
For Indian buyers, the biggest loss is the truly cheap smartphone, which is becoming rare. If you want good value this year, look at last year’s models, check memory specs carefully, and do not expect prices to fall soon.
Forecasts on how long the shortage will last vary widely, so treat any prediction beyond 2026 with caution. What is clear today is that the era of very cheap, very capable smartphones is on pause.
