Smartphone manufacturers are increasingly focusing on artificial intelligence as a key selling point for devices expected in 2026, driven by new chips optimized for on-device generative AI. This trend aims to differentiate products amid rising hardware costs, with AI-capable phone shipments already doubling year-on-year. While average selling prices for AI phones are falling due to mid-tier chip availability, they are expected to remain a premium feature due to rising memory costs. Brands are concentrating AI capabilities in mid-premium and flagship tiers to manage overall smartphone price increases.