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

High need for computers and data centers to operate them Artificial Intelligence is causing a massive shortage of RAM,driving memory prices sharply higher. 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.

Earlier this year, IDC reported that manufacturers shipped 1.26 billion devices in 2025. The company expects this 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 long-term TAM, vendor landscape, and product mix,” Nabila Popal, senior research director at IDC’s Global Quarterly Mobile Tracker, 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 sharp declines in shipments amid supply constraints and reduced demand at higher price points. Although shipments will see a record low, the average selling price of smartphones is expected to rise 14% to a record high of $523 this year,” she added.

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.

Last year, another analyst firm, CounterpointIt also expected a decline in smartphone shipments, but expected a smaller decline of only 2.6%.

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.