This article first appeared on GuruFocus.
Apple (AAPL, Financials) and other smartphone makers are expected to face higher production costs in 2026 as a global shortage of memory chips driven by artificial intelligence demand pushes up component prices, according to Counterpoint Research.
The research group predicted a 6.9% increase in smartphone prices in 2026, almost double its previous projection. Meanwhile, worldwide smartphone sales are expected to dip 2.1%, reversing prior estimates for flat to slight increase.
DRAM, which AI data centers utilize extensively, is growing in price, causing the move. As organizations create data centers employing Nvidia computers and SK Hynix and Samsung memory, demand for AI infrastructure has increased.
Counterpoint reported a 20% to 30% increase in the bill of materials for low-end smartphones under $200 this year, and 10% to 15% for mid- and high-end handsets. Manufacturers see more pressure from 40% higher memory costs until mid-2026.
The business said Apple and Samsung can handle the effect better than smaller and lower-end smartphone manufacturers, who may have to choose between price, profitability, and market share.