Smartphone Storage Increasing: How AI is Driving the Trend | PCW Plus

Despite rising costs across the board, a surprising trend is emerging in the smartphone market: the average storage capacity of new devices is projected to increase in 2026. A new report from TrendForce indicates that smartphone storage capacity could grow by approximately 4.8% this year, a shift from previous expectations of a decrease due to escalating NAND memory prices. This counterintuitive development is driven by a combination of manufacturers phasing out lower-storage models and the increasing storage demands of advanced, on-device artificial intelligence features.

The Rising Cost of Everything, and the Unexpected Storage Bump

2026 is shaping up to be a challenging year for smartphone manufacturers – and consumers – as component costs continue to climb. Memory chip prices, in particular, have seen a dramatic surge, increasing by 80-90% in the first quarter of the year, reaching record highs for both DRAM and NAND Flash. As Techworld.hu reports, this price increase is forcing manufacturers to increase the capacity of base models, even as overall costs rise.

Although, the TrendForce report highlights a surprising resilience in storage capacity. Manufacturers are increasingly moving away from offering phones with minimal storage, recognizing that consumers are less willing to compromise on space. This shift is not simply a matter of consumer preference; it’s becoming a necessity dictated by the growing footprint of modern smartphone software.

AI’s Unexpected Demand for Storage

The primary driver behind this increased storage demand is the integration of more sophisticated, locally-run artificial intelligence capabilities. These features, which perform tasks like image processing, voice recognition, and predictive text directly on the device, require significantly more storage space than traditional smartphone applications. TrendForce estimates that modern, on-device AI can consume anywhere from 40 to 60 GB of storage, substantially raising the baseline requirements for new phones.

This demand is already influencing the storage configurations of flagship devices. Apple, known for its historically conservative storage offerings, has increased the base storage of the iPhone 17 to 256 GB. Huawei is offering models in its Mate 80 series with up to 512 GB of storage, and Samsung’s Galaxy S26 line now starts at 256 GB as well. PCW Plus notes that this trend isn’t limited to high-end devices; manufacturers are increasingly opting for 128 GB or 256 GB configurations for mid-range and entry-level phones, phasing out smaller storage options.

The Impact on Different Smartphone Segments

The impact of rising memory costs isn’t uniform across the smartphone market. Entry-level smartphones are particularly vulnerable. According to ICT Global, memory costs can account for as much as 20-25% of the total manufacturing cost of a budget phone, compared to just 10-15% for a premium model. This means that even minor increases in memory prices can significantly erode profit margins for manufacturers of cheaper devices, forcing them to either raise prices or reduce hardware specifications.

Premium smartphones, with their higher price tags, are better positioned to absorb these increased costs. However, the trend towards larger storage capacities is still evident, as manufacturers seek to provide a more compelling user experience and differentiate their products.

The Future of Smartphone Storage: 256GB as the New Baseline?

The current trajectory suggests that 128 GB may soon become a relic of the past for higher-end Android phones. Industry analysts predict that 256 GB could become the standard minimum storage capacity by the end of 2026. This shift reflects a fundamental change in how consumers use their smartphones, with a growing emphasis on multimedia consumption, content creation, and the use of AI-powered applications.

While the increasing demand for storage is largely driven by AI, it’s also a response to evolving user habits. Smartphones are no longer simply communication devices; they are portable entertainment centers, cameras, and productivity tools. Users are storing more photos, videos, music, and apps on their devices than ever before.

What Comes Next: A Gradual Transition

The transition to larger base storage capacities will likely be gradual. Manufacturers will continue to offer a range of storage options to cater to different consumer needs, and budgets. However, the trend towards larger storage is undeniable, and it’s likely to continue as AI becomes more prevalent and user expectations continue to rise. The focus for manufacturers will be on balancing the cost of increased storage with the necessitate to maintain competitive pricing and profitability. Further monitoring of NAND Flash and DRAM pricing will be crucial, as will tracking the evolving storage demands of new AI applications.