I think you misunderstand capitalism. There have always been products that have reached peak innovation and have become ubiquitous, cheap, and offered by many suppliers at prices very near to their cost. They are called commodities.
A great example of commodities are foods in the produce aisle. Sure, people grow and sell specialty cultivars (sometimes even with patents! -- especially the GMOs), but by and large... they're commodities.
Screws, nails, hinges, bolts, nuts, pine wood, and many other things used in construction are commodities.
The cell phone has a long way to go before it becomes a commodity unencumbered by patents, but its product life cycle will eventually be extended -- just like desktop PCs and laptops have gone from 2 year cycles to 3 year cycles... to 5 year and now 7 year cycles or longer. If/when Moore's Law prevents further die shrinks, we'll probably see some architecture changes that will keep things chugging along for a while..... and new battery technologies as well. But, sooner or later, after we've gotten the right architecture on the smallest sized chip with the best possible battery running on the fastest speed (5G or faster), and the patents run out on the hardware and the license restrictions on software are gone -- boom. Cell phone becomes a commodity with little to no change and cheap price.
What drives the market is the exchange of goods and services. People are always going to need things they can't reasonably make/grow for themselves and have time and/or money to trade for those things. Capitalism doesn't live and die by computer/cell phone technology innovations. It's been around since long before computers existed. Plenty of other things to make and improve -- lots of new areas that need innovation as well. But, even if we become hyper advanced to where everything that could be invented has been and we have no new applications for that technology... people will still need stuff & still be willing to work or trade with others for that stuff in exchange for stuff that their trading partners want in return. That's the core of capitalism.