Memory shortages could cause the biggest drop in smartphone shipments in more than a decade

The increased need for computers and data centers to run AI is leading to a massive shortage of RAM, causing memory prices to rise sharply. Now, analyst firm IDC expects this to result in smartphone shipments falling 12.9% this year, making it the largest single-year decline in more than a decade. Hours after IDC published its report, another analysis firm, Counterpoint, made a similar forecast and said the market would fall 12% this year.

Earlier this year, IDC reported that manufacturers shipped 1.26 billion devices in 2025. The company expects that number to drop to just 1.12 billion this year.

“The memory crisis will cause more than just a temporary decline; it represents a structural reset of the entire market, fundamentally reshaping the entire market in the long term. [total addressable market]Nabila Popal, senior research director for IDC’s Global Quarterly Cell Phone Tracking Program, said in a statement:

Bhopal said that due to the memory shortage, the average retail price of a smartphone is expected to rise by 14%.

“We expect consolidation as smaller players exit, and low-end sellers face a sharp decline in shipments amid supply constraints and reduced demand at higher price points. Although shipments will see a record decline, ASP smartphones [average selling price] It is expected to rise 14% to a record high of $523 this year.

Bhopal also noted that higher component costs could make a sub-$100 smartphone “permanently uneconomical,” pricing out phone makers who make devices at that price point.

Due to this trend, shipments in the Middle East and Africa will decline by more than 20% year-on-year, the company said. China and the broader Asia-Pacific region (excluding Japan) will also see declines of 10.5% and 13.1%, respectively.

IDC added that it expects RAM prices to stabilize by mid-2027.

Counterpoint said premium smartphones will be more resilient to this change, but the sub-$200 smartphone segment will see a 20% decline.

“The impact is expected to continue through the second half of 2027, as memory supplies will take several quarters to expand. Lower-spec smartphones are likely to be affected the most, especially with LPDDR4 supplies shrinking faster than expected. OEMs are already responding with launch delays, simplified wallets, and spec swaps. We also observed 10% to 20% price increases across some Android OEM wallets in January 2026,” analyst Yang Wang said.

The company also expected that price fluctuations among phones would also lead to a rise in the used device market.

Earlier this year, Carl Pei, co-founder and CEO of Nothing, warned that smartphones will cost more in 2026 as memory costs for smartphones rise. “Brands now face a simple choice: raise prices by 30% or more in some cases, or cut specifications. The ‘more specs for less money’ model on which many value brands were built is no longer sustainable in 2026,” he said.

“As a result, some markets, especially entry-level and mid-tier segments, are likely to shrink by 20% or more, and brands that have historically dominated these segments will face difficulties,” Pai added.