The growing need for computers and data centers to power AI has led to significant RAM shortages and skyrocketing memory prices. Analyst firm IDC now predicts this will cause smartphone shipments to plummet 12.9% this year, the biggest single-year drop in more than a decade. Hours after IDC released its report, another analyst firm, Counterpoint, made a similar prediction, saying the market would fall 12% this year.
Earlier this year, IDC reported that manufacturers shipped 1.26 billion devices in 2025. The company predicts that number will drop to just 1.12 billion units this year.
“The memory crisis will not only cause a temporary decline, but will also represent a structural reset of the entire market, fundamentally reshaping the long-term TAM.” [total addressable market]vendor landscape, and product mix,” Nabila Popal, senior research director for IDC’s Worldwide Quarterly Mobile Phone Tracker, said in a statement.
Popal said he expects the average retail price of smartphones to rise by 14% due to the memory shortage.
“Consolidation is expected as smaller players exit and low-end vendors face sharp decline in shipments due to supply constraints and lower demand at higher price points.While shipments will witness record decline, smartphone ASP [average selling price] It is expected to rise 14% this year to an all-time high of $523,” she added.
Popal also noted that rising component costs could make sub-$100 smartphones “permanently uneconomical,” potentially raising prices for phone manufacturers who make devices in that price range.
The company said this trend will reduce shipments in the Middle East and Africa by more than 20% year over year. China and the broader Asia-Pacific region (excluding Japan) are also expected to 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 premium smartphones are more resilient to this change, but the sub-$200 smartphone segment is expected to see a 20% decline.
“The impact is expected to last into the second half of 2027, as memory supply expansion will take several quarters to materialize. Low-end smartphones are likely to be most affected, especially as LPDDR4 supply is shrinking faster than expected. OEMs are already responding with launch delays, portfolio rationalizations, and specification tradeoffs. We are seeing price increases of 10% to 20% in the OEM portfolio,” said Principal. Analyst Yang Wang said:
The company also predicted that device price fluctuations would also boost the used device market.
Earlier this year, Karl Pei, co-founder and CEO of Nothing, also warned that smartphone prices would become even more expensive in 2026 as the cost of smartphone memory increases. “Brands are now faced with the simple choice of increasing prices, in some cases by more than 30%, or lowering specs. The model of ‘more specs for less’ that many value brands have built will no longer be sustainable in 2026,” he said.
“As a result, some markets, particularly the entry and mid-tier segments, are likely to shrink by more than 20%, and brands that have historically dominated these segments will struggle,” Pei added.
