Memory Shortage Poised to Cause Largest Smartphone Shipment Drop in Over a Decade

Global - Ekhbary News Agency

Memory Shortage Poised to Cause Largest Smartphone Shipment Drop in Over a Decade

The global smartphone market is bracing for a significant downturn, with leading market intelligence firm IDC forecasting the largest annual decline in smartphone shipments in over a decade. The firm predicts a stark 12.9% drop in shipments for the current year, a consequence of a widespread shortage in Random Access Memory (RAM). This critical component shortage has been exacerbated by the insatiable demand for computing power and data center infrastructure required to fuel the rapid advancements in artificial intelligence (AI).

IDC's latest analysis indicates that global smartphone shipments, which stood at 1.26 billion units in 2025 according to earlier reports, are expected to fall to just 1.12 billion units this year. Nabila Popal, Senior Research Director at IDC's Worldwide Quarterly Mobile Phone Tracker, described the situation as more than a temporary setback. "The memory crisis will cause more than a temporary decline; it marks a structural reset of the entire market, fundamentally reshaping the long‑term TAM [total addressable market], the vendor landscape, and the product mix," Popal stated.

A major ripple effect of the RAM shortage is the anticipated increase in the average selling price (ASP) of smartphones. IDC forecasts a 14% rise in the average smartphone price, pushing it to a record $523 this year. This price hike is attributed to the increased cost of components, particularly memory chips, forcing manufacturers to adjust their pricing strategies. Consequently, the market segment for smartphones priced below $100 is facing a particularly bleak outlook, with the possibility of becoming "permanently uneconomical" due to rising production costs.

The analysis suggests a period of market consolidation. Smaller players are expected to exit the market, while vendors focusing on the low-end segment will likely experience sharp declines in shipments. These challenges stem from supply constraints and reduced demand at higher price points. While the sheer volume of devices shipped may decrease, the overall market value could remain resilient or even grow due to the increased ASP.

Regional shipment forecasts paint a varied picture. The Middle East and Africa region is projected to see the steepest decline, with shipments expected to drop by over 20% year-over-year. China and the broader Asia Pacific region (excluding Japan) are also anticipated to experience significant contractions, with forecasted declines of 10.5% and 13.1%, respectively. IDC anticipates that RAM prices will begin to stabilize around mid-2027, offering a potential easing of pressure on the industry in the coming years.

This outlook contrasts with previous forecasts. Last year, Counterpoint Research had predicted a more modest decline of just 2.6% in smartphone shipments. Furthermore, Carl Pei, co-founder and CEO of Nothing, had earlier warned of rising smartphone costs in 2026 due to increasing memory expenses. Pei highlighted the difficult choices facing brands: either raise prices by as much as 30% or more, or compromise on device specifications. He noted that the long-standing model of "more specs for less money" is no longer sustainable for many value-oriented brands.

The implications are significant, particularly for the entry-level and mid-tier segments, which could shrink by 20% or more. Brands that have historically thrived in these market tiers may face considerable challenges adapting to the new economic realities and supply chain dynamics. This structural shift necessitates a strategic reevaluation by manufacturers, focusing on innovation, supply chain resilience, and delivering compelling value propositions to consumers in an evolving technological landscape.

Ekhbary News Agency