AI boom-driven chip crisis could hit smartphone prices in 2026

The chip crunch driven by the AI boom is likely to hit smartphone global production and prices in 2026.

According to Counterpoint Research, global smartphone shipments are expected to fall by 2.1 percent on the back of rising chip costs.

The average selling price could soar 6.9 percent year-on-year in 2026, compared to previous forecast of 3.6 percent rise.

The chip shortage will hit the electronics supply chains as the tech giants are investing heavily in cloud computing and AI infrastructure, including data centers, thereby leading to bottlenecks in semiconductor supply chains.

According to Counterpoint Research Director MS Hwang, the low-end smartphone market which sells devices under $200 is suffering from the current economic shifts.

Since the start of the year, the bill-of-materials (BOM) costs have soared by 20-30 percent.

As per report findings, the Chinese smartphone manufacturers, such as Honor and Oppo are at the risk of bearing the brunt due to poor profit margins and surging production costs.

"Apple and Samsung are best-positioned to weather the next few quarters," Counterpoint senior analyst Yang Wang said.

Nvidia’s recent move to use smartphone-style memory chips in its AI servers could double chips prices by 2026.

“Memory prices could rise another 40% through Q2 2026, resulting in BoM costs increasing anywhere between 8% and over 15% above current elevated levels,” Counterpoint said.

Another research firm, IDC, earlier this month also projected a 0.9 percent decline in smartphone shipments due to increased prices.