$800 flagships to get a $200 price hike in "the single largest annual drop" in phone market history

You'd be right to guess that everybody is after oil and gas these days, but the world can't get enough RAM, either. The memory demand from multi-billion-dollar AI projects and gargantuan data centers has driven prices higher than the Artemis II.

While you already know all of the above, it's important to highlight what will could happen to the smartphone market. Ultimately, are we to cough up more for a phone in the near future?

It's going one way: up

It all started in 2025, when memory prices went up by ~50% in the last several months; in Q1 2026, they're expected to rise another 50%, plus another 20% by the end of June. This will fundamentally alter the BoM (Bill of Materials) for smartphone makers, as Counterpoint's latest report reads.

For example, in a smartphone that costs about $800 (wholesale), memory can now make up around 40% of the total cost, which is three times higher than a year ago. By the end of June 2026, the cost to build a premium phone could rise by more than $150 compared to early 2025.

This means that brands could increase the final retail price by over $200, or more than 25%. I hope your piggy banks are chock-full of gold.

The $700-$999 segment was the fastest growing in 2025, globally speaking. Sales for such phones grew by 25%, compared to 2024. But will "accessible" flagships manage to retain this level of popularity if they go another 25-30% up?!

Samsung already introduced price hikes

On February 25, when Samsung unveiled its Galaxy S26 family, the most expensive model of them all – the Ultra – did not get a price hike. The baseline Galaxy S26 and Galaxy S26 Plus, however, were wheeled out with a $100 higher price tag.

What will the rest of the gang do?

This could open the door for other brands to step in and compete more aggressively in the "accessible flagship" space.

Companies like Google, Motorola, Oppo and Honor are in a good position, especially as some of them have already shown strong growth, per the report. Honor, for example, gained traction in 2025 by offering noticeable upgrades in areas like camera, battery and AI.

So, new chips, better cameras, and more efficient batteries are now essential, not optional. With AI features becoming more common on smartphones, devices need to handle more processing while staying power-efficient. Features that used to be limited to top-tier flagships are slowly making their way into cheaper models.

The way ahead

Still, 2026 is shaping up to be a tough year overall. The rising cost of memory is expected to hit the market hard, with global smartphone shipments likely to drop by around 12% year-over-year: "the single largest annual drop in smartphone history".

Budget phones could suffer the most, as higher component costs make them harder to produce and sell at low prices.

The only segment expected to hold up is the premium tier; but even there, growth could be limited. As prices go up, brands will need to justify the cost with real improvements, not just small upgrades.

So if the Galaxy S27 Ultra comes with a 5,000 mAh battery again, that'll be funny. Sorry, I mean: it'll be "funny".