Smartphone storage will grow in 2026 despite high prices

The smartphone market is facing a development in 2026 that many hadn't anticipated. Everything initially pointed to rising prices for NAND flash memory and a tighter supply leading to a decline in device specifications. Instead, the opposite trend is emerging: the average storage capacity in smartphones continues to increase. This is primarily due to the growing integration of artificial intelligence directly into the devices.

In recent months, the industry assumed that manufacturers might reduce their smartphone specifications to offset rising costs. This seemed a particularly realistic scenario for storage. Lower capacities would have helped stabilize margins. However, current forecasts show that priorities have shifted. Technological requirements, especially those driven by AI, are now more important than short-term cost savings.

AI as a key driver for more smartphone storage

A key reason for the increasing storage requirements in smartphones is the growing shift of AI processes directly onto the device. This so-called edge AI makes it possible to process data locally without constantly relying on cloud services.

Major manufacturers are strategically expanding their AI capabilities. Platforms like Apple Intelligence 2.0 or Huawei's new HarmonyOS AI are at the forefront of this development. These systems require significant resources, especially storage space.

According to the report, edge AI models require between 40 and 60 GB of system memory. This space is used as a cache for local AI processing. This creates an additional demand that goes beyond classic applications such as photos, videos, or apps.

Forecast: Growth despite rising NAND prices

The TrendForce report comes to a clear conclusion: The average storage capacity of smartphones will increase by about 4.8 percent in 2026.

This is remarkable, as the initial situation actually argues against it. NAND flash memory is becoming more expensive, while at the same time the supply is becoming scarcer. Previous expectations therefore assumed that manufacturers would equip their devices with less memory to save costs.

However, this assumption has not been confirmed. Instead, the increased storage requirements due to AI applications are considered more important than potential savings.

Strategy change at smartphone manufacturers

Manufacturers are responding to this trend with concrete measures. A key step is the gradual phasing out of models with low storage capacity.

One example of this is the adjustment made to iPhones. Apple already removed the entry-level model with 128 GB from its lineup last year. The iPhone 17 series starts at 256 GB instead. The goal is to provide sufficient storage for AI applications and user data.

Even newer models like the iPhone 17e follow this approach, replacing lower-capacity versions. This strategy contributes to increasing the overall average smartphone storage capacity.

Market-wide effects and technological influences

The trend is not limited to individual manufacturers. According to the report, a broader development is evident across the entire smartphone market.

In addition to the demands of AI, technological changes in the manufacturing of NAND flash also play a role. Process upgrades at manufacturers are leading to the gradual disappearance of smaller memory variants.

This leads to a so-called passive increase in storage capacity. Even without direct demand for more storage, the average value continues to grow.

Differences between iPhones and Android devices

The development is not progressing at the same rate for all devices. The report highlights that iPhones are expected to show faster growth in storage capacity than Android smartphones in 2026.

The reason lies in the already increased base configuration of the iPhone 17 series, which starts at 256 GB. This automatically increases the average value more.

At the same time, premium smartphone brands in particular benefit from this development. These manufacturers can more easily offset higher storage costs and strategically use larger capacities to justify higher prices and improve the AI experience.

Smartphone storage is growing despite rising costs

The smartphone market is developing differently in 2026 than originally expected. Despite rising costs and scarce resources, storage capacity continues to grow. Artificial intelligence plays a central role in this and fundamentally changes the requirements for modern devices.

Instead of cutting corners on storage, manufacturers are focusing on expansion. Larger base capacities, the abandonment of small storage options, and new technological standards are driving this development. The smartphone is thus increasingly becoming a platform for local AI processing – with a correspondingly growing need for storage. (Image: Shutterstock / DavideAngelini)