A new TrendForce report reveals that smartphone storage capacities will actually increase in 2026, contrary to earlier predictions of spec reductions due to rising NAND Flash prices. The shift comes as on-device AI processing requires significantly more storage space, with edge AI models needing 40-60 GB of system storage for local processing.

Initially, industry analysts expected smartphone manufacturers to scale back storage options to protect profit margins as NAND Flash prices climbed. However, premium brands like Apple and Huawei are expanding AI capabilities through platforms such as Apple Intelligence 2.0 and Huawei's HarmonyOS AI, driving the need for larger base storage configurations. Apple's decision to discontinue the 128 GB iPhone option and start all iPhone 17 models at 256 GB reflects this strategic shift.

This trend represents a broader market evolution where manufacturers are discontinuing low-capacity models not just for AI demands but also due to manufacturing process upgrades at NAND Flash facilities. TrendForce notes that iPhone storage growth will outpace Android devices in 2026 since Apple already increased its base configuration to 256 GB. Premium smartphone brands, better positioned to absorb higher memory costs, are using expanded storage to support higher device prices while enhancing AI experiences.