The smartphone world is changing fast. Generative AI features are quickly moving from fancy extras on premium phones to something people expect on pretty much everything. According to Counterpoint Research, phones with GenAI capabilities are on track to make up nearly half of all global shipments next year, even while the overall market is heading for its biggest drop in years.
Counterpoint’s latest forecast shows GenAI-equipped smartphones jumping from 36% of shipments in 2025 to 45% in 2026, and then up to 52% in 2027. It’s becoming a standard feature faster than many expected. Apple has already unveiled several GenAI features that are expected to arrive with the iPhone 18 series this September. Android OEMs, meanwhile, are moving beyond basic AI tools and focusing on more advanced “Agentic AI” experiences for their flagship devices.
But here’s the twist: this AI boom is happening while the broader smartphone market is struggling. Global shipments are expected to fall 13.9% in 2026, down to just 1.08 billion units, reportedly the lowest level since 2013. The main reason? A serious memory chip shortage. Manufacturers are shifting production toward high-profit AI server memory (like DRAM and HBM), which has caused prices for the memory used in phones (LPDDR) to shoot up.
This is hitting cheaper phones the hardest. Some budget and entry-level models might even disappear from shelves. Higher-end GenAI phones can absorb the increased costs more easily, so we’re seeing even stronger premiumization, with people either buying flagship phones or looking for refurbished ones.
This situation clearly benefits big players like Samsung and Apple, who already dominate the high-end smartphone market. Samsung is in an especially strong position because it also produces a large share of the advanced memory chips powering AI servers and data centers. Meanwhile, brands that rely on selling lots of affordable phones, especially in emerging markets, are feeling the squeeze.
On the bright side, as GenAI features get smarter (on-device image generation, intelligent assistants, advanced photo editing, etc.), they’re giving people real reasons to spend more. Once the memory supply situation eases, probably late 2027, the industry could come out stronger with more capable phones overall.
Don’t miss a thing! Join our Telegram community for instant updates and grab our free daily newsletter for the best tech stories!
For more daily updates, please visit our News Section.
(Source: Counterpoint)
Comments