AI data centres are driving up the cost of memory chips essential for smartphones. This surge is expected to increase smartphone prices and reduce shipments by 2026.

If you were planning to upgrade your phone in the next year or two, you might want to brace yourself, or better, start saving now. The next wave of smartphones could come with noticeably higher price tags, and the unlikely culprit behind it all is artificial intelligence. Not the kind that helps you edit photos or summarise emails, but the massive, power-hungry AI data centres quietly reshaping the global tech supply chain.
 

According to fresh research from Counterpoint, the explosive demand for AI infrastructure is triggering a knock-on effect that’s reaching everyday consumers. As data centres soak up critical components at a rapid pace, smartphone manufacturers are being squeezed, production costs are rising, and prices are almost certainly heading north. At the heart of the problem lies one small but essential component: memory.

How AI data centres are quietly draining the smartphone supply

Next-gen smartphones and advanced AI servers rely heavily on the same type of memory chips, particularly DRAM. These chips are crucial for handling complex tasks, whether that’s running a powerful AI model in a server rack or keeping your phone responsive while juggling apps, games, and photos.

The issue is that AI data centres, especially those running advanced Nvidia-based systems, are far more profitable for memory suppliers than smartphones. As global investment in AI accelerates, manufacturers are prioritising these high-margin customers, leaving fewer chips available for consumer electronics. The result is a tightening supply and rapidly rising prices.

https://www.indiatoday.in/technology/news/story/smartphone-prices-may-jump-69-per-cent-in-2026-as-chip-shortages-push-costs-higher-2837075-2025-12-17