AI Data Center Demand Is Driving Up Smartphone Prices and Pushing Out the Cheapest Phones

Smartphone prices have risen about 15% globally this year, and newly launched models cost roughly 25% more than last year, as a memory chip shortage driven by AI data center demand raises manufacturing costs.

Shipments of sub-$100 smartphones fell almost 60% year over year in the second quarter of 2026, according to IDC, and Chinese makers are cutting entry-level projects in favor of pricier devices. GSMA warns the trend could widen the digital divide.