An increasing demand for computers and data centers for AI is leading to a significant RAM shortage, causing memory prices to surge. Analyst firm IDC predicts smartphone shipments will drop by 12.9% this year, marking the largest decline in over a decade.
Earlier this year, IDC reported that 1.26 billion devices were shipped in 2025, anticipating a decrease to just 1.12 billion this year.
The memory shortage represents more than a temporary setback; it signifies a market-wide restructuring, altering long-term TAM, vendor dynamics, and product offerings, said Nabila Popal, senior research director at IDC’s Worldwide Quarterly Mobile Phone Tracker.
Due to the memory shortage, the average smartphone selling price is expected to increase by 14%.
“With memory constraints impacting supply and demand at elevated price levels, we anticipate that smaller vendors will exit and lower-end vendors will experience steep shipment declines. Despite a record drop in shipments, smartphone ASP is anticipated to climb 14% to a record $523 this year,” Popal mentioned.
Popal also highlighted that rising component costs might render sub-$100 smartphones “permanently uneconomical,” making production at that price point unfeasible.
This trend is expected to result in a more than 20% year-over-year shipment decrease in the Middle East and Africa. Other regions like China and Asia Pacific (excluding Japan and China) are projected to decline by 10.5% and 13.1%, respectively.
IDC expects RAM prices to stabilize by mid-2027.
Last year, analyst firm Counterpoint also projected a decrease in smartphone shipments, though its estimate was only 2.6%.
Earlier this year, the co-founder and CEO of Nothing Carl Pei stated that smartphones would get more expensive in 2026 due to increased costs of memory modules. “Brands now have a choice: raise prices by 30% or more in some cases, or reduce specifications. The ‘more specs for less money’ model many value brands relied on is unsustainable in 2026,” he said.
“As a consequence, some markets, especially entry and mid-tier segments, are expected to shrink by 20% or more, posing challenges for brands historically dominant in these segments,” noted Pei.