Smartphone Market Faces Record Decline Amid Memory Price Surge

The global smartphone market is projected to experience its largest decline on record in 2026, sinking to a more than decade low in shipments, as surging memory chip prices drive up device costs, the International Data Corporation (IDC) said on Thursday.

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The International Data Corporation (IDC) reports that smartphone shipments are forecast to drop by 12.9% to 1.12 billion units. This decline is expected to most severely impact low-end Android manufacturers.

Apple and Samsung, however, are positioned to gain market share as smaller competitors face difficulties or exit the market entirely. Francisco Jeronimo, vice president for Worldwide Client Devices at IDC, stated, "What we are witnessing is not a temporary squeeze, but a tsunami-like shock originating in the memory supply chain."

A rapid expansion of artificial intelligence infrastructure by technology firms such as Meta, Google, and Microsoft has captured a substantial portion of the memory chip supply. This shift has driven up prices as manufacturers prioritise components for higher-margin data centres over consumer devices.

Memory chips, also known as DRAM, are essential for smartphones, enabling power-hungry applications to run smoothly. Analysts suggest that rising component costs will compel budget-device companies to transfer these expenses to consumers.

This occurs concurrently with weakening demand at higher price points. Apple and Samsung, with stronger balance sheets and premium positioning, are better positioned, IDC said.

IDC anticipates the average selling price of smartphones will surge by 14% to a record USD 523 this year. This increase reflects manufacturers' shift towards higher-margin models to offset escalating costs.

A modest 2% recovery is expected in 2027 as the crisis eases, followed by a 5.2% rebound in 2028, though the market is not likely to return to previous norms. Nabila Popal, senior research director at IDC's Mobile Phone Tracker, warned, "The memory crisis will cause more than a temporary decline; it marks a structural reset of the entire market."

The sub-USD 100 smartphone segment, representing 171 million devices, will become "permanently uneconomical," even after memory prices stabilise by mid-2027.

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• The global smartphone market is set for its biggest decline in 2026, IDC reported.

• Surging memory chip prices are driving up smartphone production costs.

• Low-end Android manufacturers are expected to be hit hardest, while Apple and Samsung may gain market share.

Source: REUTERS