TrendForce expects about 1.07 billion smartphones to be made in 2026, 14% fewer than a year earlier, according to its September 2026 forecast. Output in the second quarter of 2026 was 275 million phones, down 8%. The quarterly figure is reported data. The annual one is a forecast.
Chipmakers are shifting capacity to AI servers. As a result, cheap smartphones come with less memory, and prices are rising on all models. Reports that Chinese budget models use recycled memory from old phones remain unconfirmed.
AI chips squeeze out phone memory
Random access memory (RAM) holds the data a phone is using at that moment. Chipmakers earn more from memory for AI servers and graphics cards, so less standard memory is left for phones and computers. IDC says demand from computers and data centres that power AI has caused a big shortage, and prices are jumping.
For the second quarter of 2026, TrendForce forecast that prices of LPDDR4X memory, the older type used in cheaper models, would rise 70–75% from the previous quarter. It said prices of the faster LPDDR5X would rise 78–83%. These are estimates, not final contract prices. The two types of memory cost different amounts.
Memory makes up a different share of the cost of each phone. IDC says it is 15–20% of the cost of materials in a mid-range phone and 10–15% in a flagship. That is why cheap models are hit hardest.
MS Hwang, an analyst at Counterpoint, says materials for phones under $200 have cost 20–30% more since the start of 2025. The firm expects such models to cost about $30 more.
Less RAM and higher prices
TrendForce says high-end models are getting 12 GB, while 16 GB is being dropped. Mid-range phones are going back to 8 GB, and entry-level phones are settling at around 4 GB. Phones with 2 GB and 3 GB are slowly disappearing, and output of the weakest ones is falling. Even so, the average amount of memory per phone will still grow 10%, to 8.5 GB in 2026, the same forecast says.
IDC's February forecast said the average smartphone price would jump 14% to a record $523 in 2026. It said phones under $100, about 171 million a year, would become "effectively uneconomical". IDC says this segment fell almost 60% year on year in the second quarter of 2026. Last year it totalled about 173 million phones.
At the end of August 2026, IDC cut its forecast for phone shipments in 2026 to a fall of 16.7%, from 13.9% before. Memory will keep getting costlier until at least 2028, and phones launched in 2027 may cost more than today's. Prices are unlikely to return to 2025 levels.
Makers of cheap models are hit hardest. Transsion, which focuses on the entry level, made close to 20 million phones in the second quarter of 2026, about 27% fewer than a year earlier. Expensive models are holding up better, and Apple, Samsung and Huawei are in a stronger position.
Omdia expects buyers not to count on big discounts. TrendForce says some people had already bought earlier because they expected higher prices, and this helped output in the second quarter. It warns that the pressure could grow once that effect fades and memory prices keep rising in 2027.
Unconfirmed reports of recycled chips
On 19 October 2026, TrendForce republished Chinese media reports that manufacturers are buying chips taken from discarded phones through traders at the Huaqiangbei market in Shenzhen. Recycling firms remove the chips from circuit boards, clean off the solder and repackage them. The sources are unnamed, and neither the authorities nor the companies have confirmed the claims. According to these reports, such chips go mostly into the cheapest unbranded phones and are unlikely to reach flagships.
The figures are also unconfirmed. Some new chips cost up to 500 yuan more, and broken cheap phones sell for over 100 yuan. Analysts warn that fewer chips will be usable and that there may be compatibility problems. They say the premium for recycling could vanish if big manufacturers change their production.