Memory shortage could cause the biggest dip in smartphone shipments in over a decade | TechCrunch

A rise in the 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.

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.

“The memory crisis will cause more than a temporary decline; it marks a structural reset of the entire market, fundamentally reshaping the long‑term TAM [total addressable market], the vendor landscape, and the product mix,” said Nabila Popal, senior research director with IDC’s Worldwide Quarterly Mobile Phone Tracker, in a statement.

Popal said that because of memory shortage, the average retail price of a smartphone is expected to rise by 14%.

“We expect consolidation as smaller players exit, and low-end vendors face sharp shipment declines amid supply constraints and lower demand at higher price points. Although shipments will witness a record drop, Smartphone ASP is projected to rise 14% to a record $523 this year,” she mentioned.

Popal also noted that because of the rising component prices, the sub-$100 smartphone might be “permanently uneconomical” and make it unaffordable for phone makers to manufacture devices at that price point.

The firm said that, because of this trend, the Middle East and Africa will face shipments dropping over 20% year-over-year. Other markets like China and Asia Pacific (excluding Japan and China) will also decline by 10.5% and 13.1%, respectively.

It noted that it expects RAM prices to stabilize by mid-2027.

Last year, another analyst firm, Counterpoint, also noted that smartphone shipments would go down, but its predicted dip was only 2.6%.

Earlier this year, co-founder and CEO of Nothing Carl Pei also said that smartphones will cost more in 2026 as memory modules for smartphones have started costing more for manufacturers. “Brands now face a simple choice: raise prices by 30% or more in some cases, or downgrade specs. The ‘more specs for less money’ model that many value brands were built on is no longer sustainable in 2026,” he said.

“As a result, some markets, particularly entry and mid-tier segments, are likely to shrink by 20% or more, and brands that have historically dominated these segments will struggle,” Pei noted.