The increasing demand for computers and data centers to support artificial intelligence (AI) is causing a serious RAM shortage, pushing memory prices up sharply.
Analysis firm IDC predicts that this will cause smartphone shipments to fall sharply by 12.9% this year, marking the sharpest decrease in a year in more than a decade. A few hours after IDC released its report, another analysis firm - Counterpoint - also made a similar prediction and said that the market will fall 12% this year.
Earlier this year, IDC reported that manufacturers had shipped 1.26 billion smartphones by 2025. The company predicts that this number will decrease to only 1.12 billion units this year.
The memory crisis will not only cause temporary decline; it marks a restructuring of the entire market, fundamentally reshaping the total long-term potential market (TAM), supplier context and product structure" - Nabila Popal, Senior Research Director of IDC's Worldwide Quarterly Mobile Phone Tracker, said in a statement.
Popal said that due to the memory shortage, the average retail price of a smartphone is expected to increase by 14% in 2026.
“We predict there will be a merger as smaller manufacturers withdraw and low-price suppliers will face a sharp drop in shipments due to limited supply and lower demand in the higher-price segment. Although shipments will decrease to a record low, the average selling price (ASP) of smartphones is expected to increase by 14% to a record $523 this year,” Nabila Popal said.
Popal also noted that increased component costs could make smartphones under $100 "permanently economically inefficient", eliminating phone manufacturers that produce devices at that price.
According to Counterpoint, high-end smartphones will be less affected by memory shortages, but the under 200 USD smartphone segment is forecast to reduce shipments by 20% in 2026.
This impact is expected to continue until the second half of 2027, as the expansion of memory supply will take several quarters to actually take place. Low-end smartphones are most likely to be affected.
Original device manufacturers (OEMs) have begun to react by delaying product launches, streamlining product portfolios and adjusting specifications. We have also recorded price increases of 10% to 20% on some product portfolios of Android manufacturers in January 2026," said chief analyst Yang Wang.
The company also predicts that price fluctuations in the mobile phone market will boost the growth of the used device market.
Earlier this year, Carl Pei - co-founder and CEO of Nothing - also warned that smartphone prices will increase in 2026 due to increased memory costs for smartphones. He said: "Brands are facing a simple choice: increase prices by 30% or more in some cases, or reduce configuration. The'higher configuration with lower price' model that many low-cost brands rely on will no longer be sustainable by 2026.
