Memory chip shortage to push smartphone prices up 7% in Asia

• Memory chip shortage driving smartphone prices up 7% in 2026, hitting Asia’s budget device markets hardest
• Chinese brands like Honor, Vivo, and Oppo are facing the biggest shipment declines as the memory chip shortage squeezes margins

The memory chip shortage is poised to significantly increase the cost of Asia’s smartphone market. Manufacturers can’t get enough DRAM and NAND flash for budget devices, forcing them into an uncomfortable choice: hike prices or strip out features that consumers have come to expect as standard.

The numbers explain why the panic is setting in. Conventional DRAM contract prices are forecast to surge 90-95% quarter-on-quarter in Q1 2026, while NAND flash prices will jump 55-60%, according to market research firm TrendForce’s latest revised projections. The dramatic escalation from earlier forecasts of 55-60% and 33-38%, respectively, signals how rapidly the memory chip shortage is intensifying.

The crisis stems from memory manufacturers prioritising high-bandwidth memory (HBM) production for AI data centres over conventional chips used in consumer electronics. Samsung Electronics, SK Hynix, and Micron—which control over 90% of global memory production—are diverting capacity to serve hyperscalers building AI infrastructure, leaving smartphone makers scrambling for supply.

China’s largest contract chipmaker SMIC warned recently that the industry has entered “crisis mode,” with manufacturers unable to complete device assembly even when other components are available. “People don’t dare place too many orders for the first quarter next year because no one knows how many memory chips will actually be available—how many phones, cars, or other products it can support,” SMIC co-CEO Zhao Haijun told investors.

Asian brands bear the brunt

The memory chip shortage hits hardest in Asia-Pacific markets, where budget smartphones dominate sales channels and thin margins leave little room to absorb cost increases.

Counterpoint Research has slashed its 2026 smartphone shipment forecast by 2.6 percentage points, now projecting a 2.1% global decline, with Chinese OEMs like Honor, Oppo, and Vivo seeing the steepest downward revisions.

Bill-of-materials costs for low-end smartphones (below US$200) have already increased 25% since early 2025, while mid-range and high-end segments have seen 15% and 10% increases, respectively, according to Counterpoint.

Memory prices could rise another 40% through Q2 2026, adding 8-15% more to costs that manufacturers must either absorb or pass to consumers.

“In the lower price bands, steep price increases on smartphones are not sustainable,” said Counterpoint senior analyst Yang Wang. “And if cost pass-through isn’t possible, OEMs will start pruning parts of their portfolios—that’s actually what we are starting to see with significantly reduced volumes of low-end SKUs.”

Average smartphone selling prices are now forecast to rise 6.9% year-on-year in 2026, revised sharply upward from a 3.6% projection made in September 2025. For markets like Southeast Asia and India, where sub-US$200 devices drive volume, this represents a fundamental shift in affordability dynamics.

Specification downgrades and portfolio pruning

Unable to sustain margins amid soaring memory costs, manufacturers are deploying aggressive mitigation strategies. Some brands are downgrading camera modules, displays, and audio components, while others are reverting base models to 4GB DRAM configurations—a spec level not widely seen since 2020.

“In some models, we are seeing downgrades of components like camera modules and periscope solutions, displays, audio components and, of course, memory configurations,” said Counterpoint senior analyst Shenghao Bai.

The memory chip shortage could accelerate growth in secondary smartphone markets across Asia-Pacific. India’s used smartphone market is projected to reach $10 billion in 2026, while Southeast Asia’s refurbished market recorded 5% year-on-year growth in H1 2025, according to Counterpoint data.

As new mid-range models lose flagship features, consumers may increasingly favour older premium devices over newer budget models with compromised specifications.

Winners and losers emerge

Market consolidation appears inevitable as the memory chip shortage separates manufacturers by scale and vertical integration. Apple and Samsung, with their procurement leverage and diversified portfolios heavily weighted toward high-end devices, are best positioned to weather the crisis.

Chinese manufacturers focused on value segments face tougher choices between market share and profitability. “Apple and Samsung are best positioned to weather the next few quarters,” said Counterpoint analyst Yang Wang.

“But it will be tough for others that don’t have as much wiggle room to manage market share versus profit margins. We will see this play out especially with the Chinese OEMs as the year progresses.”

The memory chip shortage shows no signs of abating through 2026. While memory manufacturers are expanding capacity, new fabrication plants require years to come online. Until then, Asia-Pacific consumers face a stark choice: pay significantly more for smartphones or accept downgraded specifications that roll back years of democratised technology access.

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