Smartphone market facing major decline due to memory shortage

Global smartphone market set for significant drop in 2026

The smartphone industry is bracing for a substantial downturn as a persistent memory shortage continues to impact production and costs. A new report from IDC forecasts a 12.9% decline in global smartphone shipments in 2026, falling to approximately 1.1 billion units from 1.26 billion in 2025, according to a Bloomberg report.

Memory availability as the primary constraint

Qualcomm CEO Cristiano Amon has highlighted memory availability as the main obstacle facing the industry. He suggests that the capacity to secure sufficient memory will largely dictate the overall size of the handset market. This isn't just about price; it's about the fundamental ability to manufacture devices at scale. The ongoing shortage is expected to persist well into 2027, suggesting a prolonged period of constrained supply.

Impact on different manufacturers

The challenges posed by the memory crunch are not uniform across the industry. Android manufacturers, particularly those producing entry-level devices like Xiaomi and Oppo, are expected to bear the brunt of higher costs for DRAM and NAND chips. This increased expense significantly impacts their already tight profit margins, potentially leading to reduced production volumes.

Apple poised to weather the storm

Apple finds itself in a comparatively advantageous position. Its focus on the premium segment allows for higher profit margins, providing a buffer against escalating memory costs. Tim Cook, Apple's CEO, indicated last month that memory chip prices had minimal impact on their margins in the last quarter of 2025. While expecting a greater impact in early 2026, Apple is likely to absorb these costs rather than pass them on to consumers, potentially avoiding price increases for the iPhone 18 Pro.

Long-term price implications

Even after the memory supply situation normalizes, the smartphone market is unlikely to return to 2025 price levels. The extended shortage suggests a potential for permanent price increases. This shift signifies the end of the era of consistently affordable smartphones, a change that will likely be felt by consumers globally.

Most vulnerable segment: sub-$100 smartphones

IDC Senior Research Director Nabila Popal points out that the cheapest smartphones, those costing below $100, are most vulnerable. In 2025, approximately 170 million smartphones shipped in this price range. However, maintaining profitability in this segment has become increasingly challenging, suggesting a significant restructuring of the low-end smartphone market.