Memory chip shortage will cause a 13% decline in the global smartphone market by 2026, signaling the end of the cheap phone era

The global smartphone market is facing its most severe crisis in decades.

Market research firm IDC released its latest forecast, stating that due to an unprecedented shortage of memory chips, global smartphone shipments will decline by 12.9% year-over-year in 2026, a drop far exceeding the declines seen during the tariff crisis and COVID-19 pandemic.

According to IDC, global smartphone shipments will fall to approximately 1.1 billion units in 2026, down from 1.26 billion units the previous year, erasing years of market growth. IDC Senior Research Director Nabila Popal said:

Compared to this, the tariff crisis and pandemic are minor issues.

Nabila Popal predicts that the situation will not ease until at least mid-2027.

The massive demand for advanced memory driven by artificial intelligence continues to tighten global supply. For smartphone manufacturers, cost pressures are shrinking the viability of entry-level models, leading to a profound reshaping of the market landscape. IDC bluntly states that “the era of cheap smartphones is over.”

Demand pressures lead to significant downward revisions in shipment forecasts

The impact of memory shortages on the industry exceeds expectations.

IDC data shows that in 2025, approximately 170 million smartphones were shipped globally at a price below $100. Now, the market for smartphones in this price range is struggling to sustain itself.

The rising costs of DRAM and NAND chips are squeezing the already thin profit margins of many Android brands. In the price-sensitive entry-level market, memory costs account for a larger portion of total material costs.

Chinese leading manufacturers like Xiaomi and Oppo are competing for domestic market share and simultaneously boosting international brand competitiveness. They continue to invest heavily in flagship configurations, making their entry-level product lines particularly vulnerable under current cost pressures.

In response to ongoing cost shocks, most smartphone makers are adopting measures such as reducing product specifications, eliminating low-margin entry models, and guiding consumers toward higher-priced segments.

Both Xiaomi and Lenovo have issued warnings about upward pressure on retail prices. In contrast, high-end smartphones like Apple’s iPhone series are expected to demonstrate greater resilience during this crisis.

Supply gap extends into 2027, potentially permanently changing industry pricing logic

As the world’s largest mobile processor supplier, Qualcomm CEO Cristiano Amon stated after this week’s earnings report:

We just want more memory. The issue isn’t just price, but supply availability itself. I believe the supply situation of memory will determine the overall size of the smartphone market.

IDC forecasts that the memory shortage will persist until 2027. More critically, even if supply is eventually replenished, the industry’s return to previous low-price structures is highly unlikely. Nabila Popal said:

Even after the crisis ends, we do not expect memory prices to fall back to 2025 levels.

This means that this round of shocks is not only a cyclical imbalance of supply and demand but could fundamentally reshape the scale, average prices, and competitive landscape of the smartphone market.

Risk Warning and Disclaimer

Market risks are present; invest cautiously. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Invest at your own risk.