A shortage of memory chips fueled by artificial intelligence players is likely to cause a price rise in smartphones in 2026 and a drop in shipments, Counterpoint Research said in a note on Tuesday.

Smartphone shipments could fall 2.1% in 2026, according to Counterpoint, versus a previous outlook of flat-to-positive growth.

Shipments do not equate to sales but are a measure of demand as they track the number of devices being sent to sales channels like stores.

Meanwhile, the average selling price of smartphones could jump 6.9% year-on-year in 2026, Counterpoint said, in comparison to a previous forecast of a 3.6% rise.

This is being driven by specific chip shortages and bottlenecks in the semiconductor supply chain, which are pushing up component prices.

The continued build-out of data centres globally has hiked demand for systems developed by Nvidia, which in turn uses components designed by SK Hynix and Samsung — the two biggest suppliers of so-called memory chips.

However, a specific component called dynamic random-access memory or DRAM, which is used in AI data centers, is also critical for smartphones. DRAM prices have surged this year as demand outstrips supply.

For low-end smartphones priced below $200, the bill of materials cost has increased 20% to 30% since the beginning of the year, Counterpoint said. The bill of materials is the cost of producing a single smartphone.

The mid and high-end smartphone segment has seen material costs rise 10% to 15%.

“Memory prices could rise another 40% through Q2 2026, resulting in BoM costs increasing anywhere between 8% and over 15% above current elevated levels,” Counterpoint said.

The rising price of components could be passed on to consumers and that will in turn, drive the rise in the average selling price.

“Apple and Samsung are best positioned to weather the next few quarters,” MS Hwang, research director at Counterpoint, said in the note. “But it will be tough for others that don’t have as much wiggle room to manage market share versus profit margins.”

Hwang said this will “play out especially” with Chinese smartphone makers who are in the mid-to-lower end of the market.

Counterpoint said some companies may downgrade components like camera modules, displays and even audio, as well as reusing old components. Smartphone players are likely to try to incentivize consumers to buy their higher-priced devices too.

U.S. stocks of late have been shaky as investors turn away from artificial intelligence shares, especially those related to AI infrastructure, such as Oracle, Broadcom and CoreWeave.

The worry is that those companies are running into high levels of debt to finance their multibillion-dollar deals.

Oracle, for instance, said Wednesday it would need to raise capital expenditure by an additional $15 billion for its current fiscal year and increase its lease commitments for data centers. The company is turning to debt to finance all that.

The stock lost 2.7% on Monday, while shares of CoreWeave, its fellow player in the AI data center trade dropped around 8%. Broadcom also retreated over concerns over margin compression, sliding about 5.6%.

That said, major indexes were not too adversely affected as investors continued rotating into sectors such as consumer discretionary and industrials. The S&P 500 slipped 0.16%, the Dow Jones Industrial Average ticked down just 0.09% and the Nasdaq Composite, comprising more tech firms, fell 0.59%.

The broader market performance suggests that the fears are mostly contained within the AI infrastructure space.

“It definitely requires the ROI [return on investment] to be there to keep funding this AI investment,” Matt Witheiler, head of late-stage growth at Wellington Management, told CNBC’s “Money Movers” on Monday. “From what we’ve seen so far that ROI is there.”

Witheiler said the bullish side of the story is that, “every single AI company on the planet is saying if you give me more compute I can make more revenue.”

The ready availability of clients, according to that argument, means those companies that provide the compute — Oracle and CoreWeave — just need to make sure their finances are in order.

— CNBC’s Ari Levy contributed to this report.

U.S. stocks of late have been shaky as investors turn away from artificial intelligence shares, especially those related to AI infrastructure, such as Oracle, Broadcom and CoreWeave.

The worry is that those companies are running into high levels of debt to finance their multibillion-dollar deals.

Oracle, for instance, said Wednesday it would need to raise capital expenditure by an additional $15 billion for its current fiscal year and increase its lease commitments for data centers. The company is turning to debt to finance all that.

The stock lost 2.7% on Monday, while shares of CoreWeave, its fellow player in the AI data center trade dropped around 8%. Broadcom also retreated over concerns over margin compression, sliding about 5.6%.

That said, the broader market was not affected too adversely as investors continued rotating into sectors such as consumer discretionary and industrials. The S&P 500 slipped 0.16%, the Dow Jones Industrial Average ticked down just 0.09% and the Nasdaq Composite, comprising more tech firms, fell 0.59%.

The broader market performance suggests that the fears are mostly contained within the AI infrastructure space.

“It definitely requires the ROI [return on investment] to be there to keep funding this AI investment,” Matt Witheiler, head of late-stage growth at Wellington Management, told CNBC’s “Money Movers” on Monday. “From what we’ve seen so far that ROI is there.”

Witheiler said the bullish side of the story is that, “every single AI company on the planet is saying if you give me more compute I can make more revenue.”

The ready availability of clients, according to that argument, means those companies that provide the compute — Oracle and CoreWeave — just need to make sure their finances are in order.

— CNBC’s Ari Levy contributed to this report.

U.S. stocks edged down Monday. All major indexes slid as AI-related stocks continued to weigh down markets. Europe’s regional Stoxx 600 climbed 0.74%. The continent’s defense stocks fell as Ukraine offered to give up on joining NATO.

Tesla testing driverless Robotaxis in Austin, Texas. “Testing is underway with no occupants in the car,” CEO Elon Musk wrote in a post on his social network X over the weekend. Shares of Tesla rose 3.6% on Monday to close at their highest this year.

U.S. collects $200 billion in tariffs. The country’s Customs and Border Protection agency said Monday that the tally comprises only new tariffs, including “reciprocal” and “fentanyl” levies, imposed by U.S. President Trump in his second term.

Ukraine-Russia peace deal is nearly complete. That’s according to U.S. officials, who held talks with Ukraine President Volodymyr Zelenskyy beginning Sunday. Ukraine has offered to give up its NATO bid, while Russia is open to Ukraine joining the EU, officials said.

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