An increase in the need for computers and data centers to power AI is causing a massive RAM shortagedriving up memory prices significantly higher. Now, analyst firm IDC predicts that this will cause smartphone shipments to fall 12.9% this year, making it the biggest annual decline in more than a decade. A few hours after the publication of its report by IDC, another analyst firm, Counterpoint, made a similar prediction and said the market would plunge 12% this year.
Earlier this year, IDC reported that manufacturers were shipping 1.26 billion devices in 2025. The company predicts that figure will fall to just 1.12 billion this year.
“The memory crisis will result in more than a temporary decline; it will mark a structural reset of the entire market, fundamentally reshaping the TAM in the long term. [total addressable market]vendor landscape and product mix,” Nabila Popal, principal research director at IDC’s Worldwide Quarterly Mobile Phone Tracker, said in a statement.
Popal said that due to the lack of memory, the average retail price of a smartphone is expected to increase by 14%.
“We expect consolidation as smaller players exit and low-end suppliers face sharp declines in shipments amid supply constraints and falling demand at higher price points. Although shipments will see a record decline, smartphone ASP [average selling price] expected to rise 14% to a record $523 this year,” she added.
Popal also noted that rising component costs could make the sub-$100 smartphone “definitely unprofitable,” eliminating phone makers that make devices at that price point.
The company said that due to this trend, shipments to the Middle East and Africa would fall by more than 20% year-over-year. China and the broader Asia-Pacific region (excluding Japan) will also see declines of 10.5% and 13.1%, respectively.
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IDC added that it expects RAM prices to stabilize by mid-2027.
Counterpoint said that high-end smartphones would be more resilient to this change, but that the sub-$200 smartphone segment would see a 20% decline.
“The impact is expected to continue into the second half of 2027, as it will take several quarters for the expansion in memory supply to materialize. Low-end smartphones will likely be most affected, especially as LPDDR4 supply declines faster than expected. OEMs are already responding with launch delays, streamlined portfolios, and specification compromises. We have also seen price increases of 10-20% in some OEM portfolios Android in January 2026,” said Yang Wang, principal analyst.
The company also predicted that volatility in handset prices would also lead to a rise in the used device market.
Earlier this year, Carl Pei, co-founder and CEO of Nothing, also warned that smartphones would cost more in 2026 as smartphone memory costs rise. “Brands now face a simple choice: increase prices by 30% or more in some cases, or downgrade specifications. The ‘more spec for less money’ model that many value brands have been built on is no longer viable in 2026,” he said.
“As a result, some markets, particularly entry- and mid-range segments, are likely to decline by 20% or more, and brands that have historically dominated these segments will struggle,” Pei added.
Ivan covers global consumer technology developments at TechCrunch. He is based in India and has previously worked for publications such as the Huffington Post and The Next Web.
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