Why Smartphones Are Set to Get Costlier in 2026, According to Nothing CEO Carl Pei

For more than a decade, buying a new smartphone has felt like a win for consumers. Each year brought faster processors, better cameras, more storage, and sleeker designs—often without a dramatic rise in price. That long-standing trend, however, may be coming to an end. Nothing CEO Carl Pei has issued a warning that 2026 will mark a turning point for the smartphone industry, as rising component costs begin to push prices noticeably higher.

In a detailed post on X, Pei explained that smartphone makers are now dealing with pressures they have not faced in years. The industry once relied on a simple but powerful assumption: as technology matured, the prices of critical components like memory and displays would continue to fall. That allowed brands to improve hardware every year while keeping phones within reach of most buyers. According to Pei, that assumption is no longer valid.

At the heart of this shift is memory, one of the most essential parts of any modern smartphone. The same chips that store apps, photos, and videos in your phone are now in massive demand from companies building large AI data centres. These firms are racing to secure memory supplies for years ahead, leaving smartphone makers competing for what remains. As Pei noted, smartphones are no longer the top priority for memory suppliers.

This surge in demand has already had a visible effect. Pei said memory prices have jumped sharply, in some cases rising multiple times compared to last year. What used to be a relatively minor line item in a phone’s cost structure has quickly become one of the most expensive components. That change alone is enough to disrupt how phones are designed, priced, and marketed.

“When phone economics stop making sense,” Pei warned, manufacturers are left with only two choices. They can either raise prices—sometimes by a significant margin—or cut back on specifications to keep devices affordable. Neither option is ideal, especially in the budget and mid-range segments where profit margins are already thin. Pei believes these categories could feel the most strain, and some may even shrink as companies struggle to maintain the balance between cost and consumer expectations.

Nothing, the brand he leads, will not be spared either. Pei acknowledged that Nothing phones are also likely to become more expensive, particularly as newer models adopt faster storage technologies like UFS 3.1. While these upgrades improve performance and user experience, they now come at a much higher cost than before.

Beyond pricing, Pei also sees a broader shift in how the industry will evolve. As hardware becomes more expensive and harder to upgrade at low cost, the relentless “specs race” may begin to slow. Instead of focusing only on bigger numbers—more RAM, more storage, higher benchmarks—brands may turn their attention to refining the overall user experience. Software, design, and everyday usability could take centre stage as manufacturers look for new ways to add value without endlessly pushing up prices.

If Pei’s outlook proves accurate, 2026 could be the year consumers start to notice that smartphones are no longer getting cheaper, even as technology continues to advance. The era of steadily improving phones at the same price may be fading, replaced by a market shaped by global demand for the very components that power today’s AI-driven world.