A surge in the demand for computers and data centers to support AI is leading to a significant RAM shortage, which is causing memory prices to rise sharply. According to IDC, this will result in smartphone shipments dropping by 12.9% this year, marking the largest single-year decline in over ten years. Following IDC’s report, another analytical firm, Counterpoint, also predicted a 12% decrease in the market this year.
Earlier this year, IDC noted that 1.26 billion devices were shipped in 2025. The firm now forecasts that number will fall to 1.12 billion this year.
“The memory crisis is more than just a temporary setback; it represents a structural reset for the entire market, fundamentally altering the long-term total addressable market, vendor landscape, and product mix,” stated Nabila Popal, senior research director with IDC’s Worldwide Quarterly Mobile Phone Tracker.
Due to the memory shortage, Popal said the average retail price of a smartphone is anticipated to increase by 14%.
“We expect consolidation as smaller players withdraw, with low-end vendors experiencing steep shipment declines due to supply constraints and decreased demand at higher price points. Despite a record drop in shipments, smartphone ASP (average selling price) is expected to increase by 14% to a record-breaking $523 this year,” Popal added.
She also mentioned that increasing component costs might render the sub-$100 smartphone economically unfeasible, impacting manufacturers producing devices at that price level.
The firm reported that due to this trend, shipments in the Middle East and Africa would decrease by more than 20% year-over-year. China and the wider Asia Pacific region (excluding Japan) will see declines of 10.5% and 13.1%, respectively.
IDC also anticipates RAM prices to stabilize by mid-2027.
Counterpoint noted that premium smartphones would be less affected by this shift, whereas the sub-$200 smartphone segment is expected to see a 20% decline.
“The impact is projected to extend into H2 2027, as it will take several quarters for memory supply expansion to occur. Lower-end smartphones are likely to be the most affected, especially since LPDDR4 supply is shrinking faster than expected. OEMs are already reacting with launch delays, streamlined portfolios, and specification trade-offs. Price increases of 10% to 20% have been observed across some Android OEM portfolios in January 2026,” said Principal Analyst Yang Wang.
The firm also suggested that pricing volatility among handsets will drive growth in the second-hand devices market.
Earlier this year, Nothing co-founder and CEO Carl Pei warned that smartphones would become more expensive in 2026 as memory costs rise. “Brands face a clear choice now: significantly raise prices in some cases or downgrade specs. The ‘more specs for less money’ business model many value brands were founded on is not sustainable in 2026,” he stated.
“As a result, certain markets, particularly the entry and mid-tier segments, will likely contract by 20% or more, and brands that have traditionally dominated these segments will face challenges,” added Pei.