Smartphone memory shortage impacts 2026 shipments

The smartphone industry is facing a significant challenge as a memory shortage is projected to impact global handset shipments in 2026, resulting in a 12.9% decrease in the market, according to the latest market outlook from IDC. This decline is expected to lead to a reduction of approximately 160 million smartphones shipped year-on-year, halting the recovery observed in 2024 and 2025 and pushing the market to its lowest annual volume in over a decade.

Specifically, IDC highlights that the impact of the smartphone memory shortage will be most severe for vendors operating in the lower end of the Android market. Rising costs of DRAM and NAND components are squeezing profit margins, making it challenging for companies to absorb price increases. The firm anticipates that average selling prices will surge by 14% to reach a record US$523 in 2026, rendering the sub-US$100 segment, which accounts for around 171 million devices, economically unviable even after prices stabilize. Consequently, vendors may need to streamline their product portfolios, focus on premium offerings, and potentially undergo further consolidation as smaller brands struggle to secure affordable supply.

Looking ahead, the smartphone memory shortage appears to be a structural issue rather than a temporary setback. IDC predicts that supply constraints will persist throughout 2026 and into mid-2027, with prices unlikely to revert to 2025 levels within the foreseeable future. The root of the problem lies in the competition for DRAM and NAND capacity between AI infrastructure projects and consumer electronics, as suppliers prioritize higher-margin server and HBM products. Notably, industry experts suggest that major players like Apple and Samsung are better positioned to weather this storm compared to smaller Android manufacturers.

Regionally, IDC foresees the most significant decline in the Middle East and Africa, with a projected 20.6% year-on-year decrease, followed by Asia Pacific excluding Japan and China at 13.1%, and China at 10.5%. The regional distribution of this decline is crucial, as markets with a higher prevalence of budget-friendly handsets are more vulnerable when memory components constitute a larger portion of the overall cost. As highlighted in previous reports, the pressure stemming from the memory shortage is no longer limited to AI servers and premium devices. While IDC anticipates a modest 2% recovery in 2027 and a more robust 5.2% rebound in 2028, the overarching message is clear: while the market may regain volume, the era of ultra-cheap handsets is unlikely to return in a significant manner.