Your next smartphone will be faster in 2026, but it’ll likely cost you a lot more

The smartphone industry is facing a paradox. Counterpoint Research reports that global smartphone chipset shipments will drop by 7% in 2026. Normally, fewer shipments would mean trouble for the industry, but this time, manufacturers are still expected to see double-digit revenue growth.

So, why are shipments dropping? Part of the reason is the growing demand from data centers. As AI becomes more common, chipmakers are shifting their resources to produce high-margin HBM (High Bandwidth Memory) for large server farms. This shift has caused DRAM prices to rise sharply, making it harder for manufacturers to create affordable phones without taking a loss.

The biggest impact will be on phones under $150, which will be hit hardest by rising costs, according to the report. As a result, companies are putting more effort into high-end models where profits are higher. At the same time, the industry is moving from 3nm to 2nm process nodes. Samsung has already fired the first shot with its Exynos 2600, which stands as the world’s first 2nm GAA chipset, and other companies like Apple and Qualcomm are following to stay competitive.

Despite these changes, MediaTek remains the top player. Many people with budget and mid-range phones recognize the brand, and it is expected to hold a strong 34% market share in 2026, Counterpoint Research says. This is only a slight drop from 34.4% in 2025, but it keeps MediaTek ahead of the competition.

Qualcomm is in second place with a 24.7% share, and Apple holds onto its premium market at 18.1%. Samsung is the only major company increasing its share, reaching 12.1% by focusing more on its own chip designs. MediaTek is staying competitive by using ARM designs for its Dimensity 9600, which helps keep its prices lower than Qualcomm’s custom chips.

Meanwhile, Apple and Qualcomm are focusing on high-end devices. Customers appreciate the strong performance of their premium chips, and with about one in three phones in 2026 expected to cost over $500, both companies are set to earn more even if they sell fewer units.

If you plan to upgrade your phone in 2026, you will get more advanced features, but you will probably pay a higher price. Top-end phones are expected to reach 100 TOPS in on-device AI performance, and 90% of premium models will support AI features that work without an internet connection. For mid-range phones between $100 and $500, you may need to rely more on cloud-based AI.

To keep costs lower, manufacturers are using cloud offloading to provide advanced AI features. Smartphone shipments probably will not fully recover until at least 2027. In the meantime, expect brands to simplify their product lines, focus on their own chips like Google’s Tensor or Samsung’s Exynos, and highlight the improved performance to justify higher prices.