AI demand drives RAM shortage, threatening smartphone market with steepest decline in 12 years.
California: A rise in need for computers and data centers to power AI is causing a massive shortage of RAM, driving memory prices sharply higher. Now, analyst firm IDC predicts that this will cause smartphone shipments to plummet by 12.9% this year, making it the biggest single-year dip in more than a decade. Hours after IDC published its report, another analyst firm, Counterpoint, made a similar prediction and said the market will dip by 12% this year.
Earlier this year, IDC reported that manufacturers shipped 1.26 billion devices in 2025. The firm predicts that figure will drop to just 1.12 billion this year. This means about 140 million fewer smartphones will be sold in 2026 compared to last year.
Memory shortage causes market changes. The memory crisis will cause more than a temporary decline, said Nabila Popal, senior research director with IDC’s Worldwide Quarterly Mobile Phone Tracker. She explained that manufacturers ship fewer phones because they cannot get enough parts.
Smartphone prices likely to rise. Because of memory shortage, the average price of a smartphone is expected to rise by 14%. We expect phone prices will go up as companies pass higher costs to customers, Popal said. Some companies may stop making very cheap phones altogether.
Different regions affected differently. The firm said that shipments in the Middle East and Africa will drop more than 20% this year. China and the broader Asia Pacific region will also see declines of 10.5% and 13.1%, respectively. IDC added that it expects RAM prices to stabilize by mid-2027.
Lower-cost phones hit hardest. Counterpoint said premium smartphones would be more resilient to this change, but the sub-$200 smartphone segment will see a 20% dip. Lower-end smartphones are likely to be affected the most, said Principal Analyst Yang Wang. Companies like Nothing have already warned customers about higher prices in 2026.