2026 Could Bring the End of Affordable Smartphones

Smartphone buyers may need to brace for sticker shock. Nothing CEO Carl Pei has warned that 2026 could mark a turning point in the industry, with smartphone prices rising by as much as 30%. The reason? A surge in memory costs fueled by the growing demands of AI. For years, consumers enjoyed annual spec upgrades without paying more, but Pei says that era is coming to an end.

“Smartphones are now competing directly with AI infrastructure for memory, and prices are rising sharply as a result,” Pei explained in a recent post on X. This shift could reshape what buyers expect from their devices—and how much they’re willing to spend.

AI Drives Up Memory Costs

At the heart of the problem is AI. The explosion of AI data centers and high-performance computing has pushed memory prices to levels unseen in recent years. Components once considered relatively affordable, like RAM and high-speed storage, are now in fierce demand beyond smartphones.

This means manufacturers may be forced to make tough choices: either raise prices or reduce certain features to stay profitable. For brands like Nothing, which have marketed themselves as delivering high-spec devices at mid-range prices, the stakes are particularly high.

The 'Specs Race' Is Slowing Down

For over a decade, smartphone companies competed in what Pei calls the “specs race,” cramming ever-more powerful chips, cameras, and displays into phones each year. Until recently, this was possible without major price hikes thanks to falling component costs.

Now, Pei argues, that trend is over. Rising costs may slow the pace of upgrades, meaning next year’s devices could deliver fewer headline improvements—or cost more to achieve the same specs. Consumers may notice smaller performance gains or fewer camera innovations unless they’re willing to pay a premium.

Could Consumers Adapt to Higher Prices?

The potential 30% price jump raises a critical question: will buyers accept paying more for phones, or will demand shift elsewhere? Historically, consumers have shown loyalty to brands offering value, but economic realities and AI-driven memory shortages could force a rethink.

Analysts suggest that high-end devices may remain appealing, but mid-range and budget phones could face the sharpest increases. This shift might accelerate the consolidation of smartphone brands, with fewer companies able to maintain competitive pricing while offering flagship-level features.

A Turning Point for the Smartphone Market

If Pei’s prediction holds, 2026 could reshape the smartphone landscape. The era of affordable, feature-packed devices may be ending, replaced by a market where price and performance are more closely tied than ever before.

For consumers, that means preparing for bigger budgets or lower expectations. For manufacturers, it signals the need for innovation beyond hardware—software, AI optimization, and ecosystem integration could become the new differentiators.

Nothing CEO Carl Pei’s warning underscores a larger trend: smartphones are no longer insulated from the global tech boom. AI is not just transforming software; it’s now influencing the cost of the very hardware in our pockets. Buyers and brands alike may need to adjust to a future where affordability and specs no longer go hand in hand.