Smartphone Prices Surge as AI Drives Memory Chip Shortages, Cheap Models Disappear

A new report from IDC reveals a sharp rise in global smartphone prices, driven primarily by a severe shortage of NAND and DRAM memory chips. These components have seen price increases of over 300% in the past year as chip manufacturers prioritize supplying the booming artificial intelligence data center industry. This shift has caused the average smartphone price to jump 27.6%, reaching a record $581 (approximately 1,700 shekels).

The shortage has led to the disappearance of low-cost smartphones from store shelves, with Android devices particularly affected, experiencing nearly a 60% drop in sales of budget models. As mid-range smartphone prices surpass 1,500 shekels, consumers are changing their buying habits, often opting to invest in premium flagship devices instead of settling for mid-tier hardware at higher prices.

Samsung's Galaxy S26 Ultra exemplifies this trend, becoming the best-selling smartphone worldwide in the second quarter of the year, an unprecedented achievement for a high-end Android model. The report suggests that the era of affordable yet capable smartphones is ending, replaced by more expensive, advanced, and foldable devices. Buyers should prepare for higher costs or consider upgrading to premium hardware when purchasing their next phone.