BENGALURU, Jan 16, 2026, 15:48 IST
- TrendForce lowered its smartphone production forecast for 2026, citing intensifying challenges starting in the second quarter
- Brands are responding to rising memory costs by hiking prices, trimming features, or sometimes both
- Analysts caution that budget smartphones are the most vulnerable as component prices rise
Smartphone production is set to drop 7% in 2026 as brands hike prices to counteract tightening memory supplies, according to market researcher TrendForce on Thursday. The company noted that price increases on recently launched models will begin to impact production starting in the second quarter. It also flagged that some top brands are carrying higher finished-goods inventory following shipment delays in late 2025. TrendForce downgraded its forecast from a 2% decline projected in November, pointing to softer demand and steadily rising memory costs.
This forecast is crucial since memory and storage chips are central to today’s smartphones, and price fluctuations can rapidly wipe out the slim margins in mid-range devices. When costs spike, phone manufacturers often have to make tough calls: raise prices, cut back on specs like RAM and storage, or settle for reduced profits.
A severe global shortage of memory chips is driving fierce competition between AI data-centre builders and consumer electronics companies, according to a Reuters report. Samsung co-CEO TM Roh called the shortage “unprecedented,” while Interactive Brokers strategist Steve Sosnick noted, “Memory chips are certainly among the themes that are exciting our customers these days,” highlighting growing investor interest amid the supply crunch. Reuters
Industry insiders in India are anticipating a 4% to 8% hike in prices for smartphones, TVs, and laptops over the next couple of months, building on the increases seen late last year, according to The Economic Times. Tarun Pathak, research director at Counterpoint Research, noted that some brands have already pushed handset prices up by 3,000 to 5,000 rupees this month. He also cautioned that “Memory prices are likely to continue to surge in 2026 and even next year.” The Economic Times
Budget smartphones are expected to feel the pinch more sharply since memory and storage account for a bigger slice of their bill of materials, and consumers tend to postpone upgrades as prices climb. “The situation is particularly critical for vendors with heavier exposure to entry-level smartphones,” said Omdia senior analyst Runar Bjørhovde. Ryan Reith from IDC added that how long the shortage lasts will “determine the extent of the market contraction.” The Register
Samsung, the biggest Android phone manufacturer globally, is ramping up features despite rising costs for key parts. “We really want to increase accessibility of AI for all people,” mobile chief operating officer Won-Joon Choi told Axios, noting this shift is driving a focus on neural processors — specialized chips that handle AI tasks locally — and faster memory. Axios
Nothing CEO Carl Pei took a more direct stance, cautioning that the old strategy of steady spec improvements without increasing prices has “finally broken” due to rising memory costs, TechRadar reported. According to Pei, brands now have to choose between “raising prices, by 30% or more in some cases, or downgrading specs.” TechRadar
The pricing outlook isn’t set in stone. Should memory availability ramp up quicker than anticipated, or if consumers continue favoring premium models even with steeper costs, manufacturers might dodge significant reductions in production targets and features.
Right now, the pressure is forcing phone manufacturers to reconsider what features a new model should include — whether that means packing in more on-device AI or just enough memory to handle it without hiccups. Either way, shoppers in 2026 might face higher prices for the same storage or end up with less hardware for their budget.
