Analysts are predicting an unprecedented downturn in the global smartphone market in 2026, driven by soaring memory prices and constrained chip supplies.
A report from the International Data Corporation (IDC) warns that the global PC and smartphone markets could contract by 11% and 13%, respectively, as the memory crisis intensifies.
Meanwhile, Counterpoint Research forecasts a 12% year-on-year drop in smartphone shipments — the steepest decline on record — with volumes expected to fall to levels not seen since 2013.
The shortage stems from tech companies heavily investing in AI infrastructure, which is consuming large quantities of memory chips, leaving smartphone and PC manufacturers struggling to secure supplies.
“Many memory suppliers are prioritizing hyperscalers over smartphone vendors, meaning allocation for devices is deprioritized,” said Tarun Pathak, Counterpoint’s research director for devices and ecosystems. The shortage has already driven up prices for components like RAM, critical for both consumer electronics and AI data centers operated by companies such as Amazon and Meta.
IDC’s Bryan Ma noted that previous forecasts underestimated the severity of the AI-fueled demand. “It’s dramatically worsened over the past few months,” he said, adding that initial predictions for 2026 expected 8.3% growth in PCs and 2% growth in smartphones, but these have been revised downward in light of the worsening chip shortage.
Counterpoint also highlights a “structural downturn” in the smartphone market, despite 3.8% shipment growth in Q4 2025, as the chip shortage exceeded expectations.
Structural Shifts in the Market
The reports indicate that the shortage is reshaping the consumer electronics market. Manufacturers may pass rising costs to consumers, resulting in fewer new buyers and longer replacement cycles. However, the secondary and used smartphone markets may expand as consumers face higher prices.
OEMs are expected to prioritize mid- to high-end models, while some lower-end manufacturers could exit the market entirely. “Memory costs make it difficult for vendors to stay profitable on lower-end models,” said Ma. Larger companies like Apple and Samsung are better positioned to manage supply constraints due to stronger supply chains and premium pricing power.
The shortage also reinforces the “aspirational pull” of higher-end devices in both primary and secondary markets, according to Pathak.
Outlook and Recovery
The near-term outlook for consumer devices remains challenging, with relief unlikely before late 2027 unless new memory capacity comes online. IDC is monitoring potential supply from smaller Chinese memory suppliers as a possible solution, but expects limited short-term relief.
Despite the challenges, experts remain cautiously optimistic. “The smartphone market has always been resilient… eventually, people will need a phone,” said Pathak.
This combined scenario paints a difficult year ahead for the global smartphone industry, as memory shortages continue to drive higher costs and structural shifts in production and consumption.
