Memory shortage could cause the biggest dip in smartphone shipments in over a decade

Source: TechCrunch

A rise in the need for computers and data centers to power AI is causing a massive shortage of RAM, driving memory prices sharply higher. Analyst firm IDC predicts that this will cause smartphone shipments to plummet by 12.9 % this year, the biggest single‑year dip in more than a decade. Hours after IDC published its report, another analyst firm, Counterpoint, made a similar prediction and said the market will dip by 12 % this year.

Shipment Forecast

Earlier this year, IDC reported that manufacturers shipped 1.26 billion devices in 2025. The firm predicts that figure will drop to 1.12 billion this year.

“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,” — Nabila Popal, senior research director, IDC Worldwide Quarterly Mobile Phone Tracker.

Image Credit: IDC

Popal said that because of 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 vendors face sharp shipment declines amid supply constraints and lower demand at higher price points. Although shipments will witness a record drop, smartphone ASP [average selling price] is projected to rise 14 % to a record $523 this year,” she added.

She also noted that rising component costs could make the sub‑$100 smartphone “permanently uneconomical,” pricing out manufacturers that target that price point.

Regional Impact

• Middle East & Africa: shipments expected to drop >20 % YoY.
• China: decline of 10.5 %.
• Asia‑Pacific (ex‑Japan): decline of 13.1 %.

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

Counterpoint Perspective

Counterpoint said premium smartphones would be more resilient, but the sub‑$200 segment will see a 20 % dip.

“The impact is expected to continue through H2 2027, as it will take several quarters for memory supply expansion to materialize. Lower‑end smartphones are likely to be affected the most, especially as LPDDR4 supply is shrinking faster than expected. OEMs are already responding with launch delays, streamlined portfolios, and specification trade‑offs. We have also observed 10 % to 20 % price increases across some Android OEM portfolios in January 2026,” — Principal Analyst Yang Wang.

Image Credit: Counterpoint

The firm also predicted that pricing volatility will boost the second‑hand devices market.

Industry Commentary

Nothing co‑founder and CEO Carl Pei warned that smartphones will cost more in 2026 as memory costs rise:

“Brands now face a simple choice: raise prices by 30 % or more in some cases, or downgrade specs. The ‘more specs for less money’ model that many value brands were built on is no longer sustainable in 2026.”

“As a result, some markets, particularly entry and mid‑tier segments, are likely to shrink by 20 % or more, and brands that have historically dominated these segments will struggle.”