An AI upgrade cycle is expected to drive global telecom sector growth to 8% in 2026, according to a forecast released by consumer intelligence firm NIQ. The company announced that manufacturers are accelerating investment in on-device AI and connected device ecosystems, and that consumers are increasingly weighing intelligence features, integration, and premium experiences when choosing their next phone.
NIQ’s 2026 Smartphone Forecast indicated relatively stable conditions across the broader technology and durables market, with growth concentrated in premium segments.
Much of the shift traces to AI moving from an add-on feature toward a core differentiator. While on-device AI is emerging as a key point of interest in premium smartphones, NIQ found it was not the primary purchase driver. The forecast indicated that only 9% of consumers bought phones specifically for AI-driven performance improvements.
“Smartphones in 2026 are moving beyond connectivity and specifications toward intelligence and orchestration,” said Anastasia Bourneli, vice president of global mobile network at NIQ. She said NIQ data showed continued momentum toward premium, AI-enabled products, and that on-device performance and ecosystem compatibility were increasingly shaping consumer expectations and product strategies.
The NIQ forecast highlighted a transition toward agentic AI — supported by improvements in chipset architecture and neural processing — allowing phones to handle on-device AI tasks, execute multi-step workflows without cloud dependency, and anticipate user needs.
The report also described continued market polarization. While low- to mid-range devices remained the main source of unit volume, NIQ said the gains are coming almost entirely from the high end, where consumers are willing to pay for standout performance in the features they value: camera quality, battery life, storage, and increasingly, AI features.
The NIQ forecast adds to a broader picture of AI reshaping industry economics. A recent NVIDIA report found that telcos use AI for network automation more than customer service, with operators reporting profitability gains from automation and edge computing.
