According to research firm IDC, the global smartphone market is projected to contract by 12.9% in 2026 due to an unprecedented shortage of memory chips, described as "an unparalleled crisis." This latest forecast represents a significant downward revision from previous estimates and highlights the expanding impact of the ongoing memory shortage across the electronics industry. Surging demand for advanced memory to support artificial intelligence tasks has depleted global supplies through next year, now threatening the business models of numerous smartphone manufacturers.

IDC currently anticipates 2026 smartphone shipments to reach approximately 1.1 billion units, down from 1.26 billion the previous year, erasing years of slow growth. Smartphone makers are adapting to rising component costs by tightening specifications, discontinuing unprofitable entry-level models, and encouraging consumers to purchase more premium devices.

Nabila Popal, Senior Research Director at IDC, stated, "In comparison, tariff and pandemic crises seem almost trivial. Once this crisis subsides, the smartphone market will undergo profound changes in scale, average selling prices, and competitive landscape. We do not expect conditions to ease until at least mid-2027."

Soaring costs for chips—including DRAM for processing tasks and NAND for storage—are severely impacting the already thin profit margins of many Android device brands. Chinese manufacturers such as XIAOMI-W and OPPO are fiercely competing for consumers, investing heavily in top-tier components to capture greater domestic market share and enhance their brand presence globally. IDC noted that their entry-level models are most vulnerable to the new cost pressures, as memory constitutes a larger portion of their material costs.

Following its recent earnings report, Cristiano Amon, CEO of Qualcomm, the world's largest mobile processor supplier, commented, "We simply wish for more memory availability. The issue is not just about price but also about supply. Therefore, I believe memory supply will determine the overall size of the smartphone market."

Premium smartphones, such as the flagship models in Apple's iPhone lineup, are expected to weather the crisis more effectively, although companies like XIAOMI-W and LENOVO GROUP have warned that consumer prices may inevitably rise. The memory shortage is anticipated to persist until 2027, and even if supply improves, a return to previous pricing structures appears unlikely.

Popal added, "The era of cheap smartphones has ended, as we do not expect memory prices to fall back to 2025 levels even after the crisis abates." Last year, approximately 170 million smartphones priced under $100 were shipped, a segment IDC now considers unprofitable and unsustainable.