The insatiable demand for more generative AI is spiking prices in computer parts, which could roll into pricier smartphones next year.

Years of cryptocurrency mining have elevated the prices of computer parts such as graphics cards. So it's not surprising to see this trend continue with the rise of generative AI and its unrelenting need for more computing power.

What the consumer tech world didn't expect was an increase in demand for memory, which has led to a tight market in consumer RAM for PCs in recent months. That ripple effect has extended beyond computing to impact the smartphone industry as well. 

Rather than the memory sticks that slot into PC motherboards, smartphones use specialized RAM that's miniaturized to fit in handsets. However, with memory production shifting to meet the demand for massive orders from data centers that handle AI workloads, the gen AI rush is driving up prices for all types of RAM. 

And this isn't just a temporary mismatch in supply and demand -- it could be a permanent shift in the world's silicon wafer capacity, according to a mid-December report from the market intelligence firm International Data Corporation (IDC). 

Phone-makers weathered the economic turmoil of tariffs by absorbing costs, but analysts predict it'll be a different story in 2026 -- and cost increases will likely be passed on to consumers.

Don't miss any of our unbiased tech content and lab-based reviews. Add CNET as a preferred Google source.

"In the case of the upcoming memory crisis, this is something that will hit the market hard, especially to [phone-makers] playing in the low end where margins are extremely tight," said Nabila Popal, senior research director at market intelligence firm International Data Corporation (IDC). "Those vendors will have almost no choice but to pass the increased cost to consumers."

How much more expensive will phones get next year? The low end of cheap phones will likely see the biggest fluctuations. Popal expects prices in this category to spike by at least 5-10%. That's because memory makes up 15-20% of the material costs of cheaper phones, which is a higher proportion than that of pricier premium phones (around 10-15%), according to the most recent IDC report.

In response, phone-makers will shift their mix of products toward the higher end, selling more expensive handsets that have higher margins, Popal predicts. This memory crisis has been disruptive enough to alter IDC's prediction of average phone prices in 2026, swinging from a slight decline to a 2% increase. While this is likely to lead to a decline in units shipped next year, increased prices are expected to drive the overall smartphone market to a record high value of $578.9 billion, according to an IDC report released in early December. 

As memory prices spike, phones might drop their RAM specs

Aside from raising handset prices, the memory shortage could lead phone-makers to change course from expanding the amount of RAM in their product configurations to maintaining or even reducing it. 

In the third quarter of 2025, over 51% of smartphones shipped had at least 8GB of RAM or more, said Francisco Jeronimo, vice president of client devices at IDC; that number rises to nearly 93% for handsets priced at $400 or above.

"In 2026, entry-level and mid-range smartphones may revert to 4GB RAM configurations to preserve price in price-sensitive markets," Jeronimo said.

The 8-GB threshold is significant, as it's roughly considered a baseline requirement for running on-device generative AI features, such as Galaxy AI and photo features on the Google Pixel series. While phones can and do run hybrid and fully cloud-based gen AI services, such as ChatGPT, sending requests to and from data centers results in lag time before people receive answers to their queries, and they aren't usable when underground or beyond cell service.

The memory shortage has likely stalled any plans to pack the most premium phones with memory to boost AI performance, with 24GB of RAM or higher configurations scrapped for the foreseeable future, Jeronimo predicts. The upper limit on top-tier handsets is likely to be 16GB, and "Pro" variants may even revert down to 12GB to protect margins and avoid price hikes.

The extent to which these impacts are detrimental depends on the duration of the memory shortage. But the shock to consumer wallets will likely lead them to wait longer to replace their phones, especially in parts of the world where handsets are bought wholesale. In markets like the US, where phones are more commonly bought on installment plans lasting two to three years, people won't see as much of a hit to their monthly bills.