According to a recent publication by IDC on March 3, the global PC market is projected to experience an 11.3% decline in shipments for 2026. However, due to rising Average Selling Prices (ASPs), market revenue is expected to grow by 1.6%. A market stabilization is anticipated in 2027, with a full recovery postponed until 2028.
Towards the end of 2025, expectations of rising DRAM and NAND prices prompted aggressive stockpiling by PC and smartphone manufacturers. As highlighted in IDC's Q4 2025 historical shipment data report, PC shipments saw a significant increase in that quarter. This elevated shipment level continued into the first quarter of 2026, with OEMs accelerating deliveries to complete sales before memory price hikes took full effect. Consequently, IDC expects PC shipments for Q1 2026 (ending March) to be substantially higher than the forecast made in November.
The situation is more challenging for the smartphone market, with Q1 2026 shipments projected to decline by 6.8% year-over-year. As memory prices continue to climb, some manufacturers, particularly smaller players, face difficulties in securing supply or absorbing the increased costs. IDC predicts a significant drop in unit shipments starting in the second quarter. While ASPs will rise, demand is expected to be suppressed as a result. Full-year unit shipments will show negative year-over-year growth, even though revenue may appear relatively stable due to the higher ASPs.
The smartphone market faces a steeper decline. IDC forecasts a 12.9% drop in global shipments for 2026, with a 0.5% decrease in revenue. Growth of 1.9% is projected for 2027, rebounding to 5.2% in 2028.
IDC expects memory supply challenges to persist throughout 2026 and potentially into 2027. Although the rate of memory price increases is predicted to slow in the second half of this year, prices are still expected to remain elevated. Based on current assumptions, IDC's models do not forecast a return to 2025 price levels during the prediction period. The structural factors driving the shortage—competition for DRAM and NAND production capacity between AI infrastructure and consumer devices—remain in place. While some relief may come from expanded memory production capacity and participation from smaller Chinese suppliers, IDC believes this will be insufficient to fundamentally alter the crisis trajectory.
The downstream effects of the memory crisis are becoming apparent and are set to reshape the competitive landscape of the PC and smartphone markets, as well as other segments like tablets, XR headsets, wearables, and game consoles. Companies with stronger purchasing power, solid supplier relationships, and the ability to sign large-scale contracts will be better positioned to secure memory allocations at high, yet manageable, prices. Smaller and regional manufacturers, already operating on thin margins, will find it increasingly difficult to obtain supply. IDC anticipates a significant consolidation of market share towards global top-tier OEMs in 2026.
IDC also expects some new devices to launch with lower memory configurations than consumers have been accustomed to. Instead of fully absorbing the high memory costs, some OEMs may opt to reduce the amount of DRAM and NAND in their products. A phone that featured 12GB of RAM and 256GB of storage a year ago might now be offered with 8GB of RAM and 128GB of storage at the same price point. The PC market will also see a noticeable reduction in base RAM and SSD capacities. The low-end segments of both markets will bear the brunt of the impact. Budget smartphones and entry-level PCs, with their extremely thin profit margins, will struggle to absorb quarterly memory price increases that are often in the double or even triple digits. Some manufacturers may exit these price segments altogether or launch products with significantly reduced specifications, potentially at higher prices.
For price-sensitive consumers and small-to-medium businesses, this will likely lead to delayed purchasing decisions and extended replacement cycles, further depressing unit shipments. The impact is particularly severe for the smartphone market. Last year, over 360 million smartphones globally were sold for under $150, accounting for nearly 60% and 30% of key emerging markets like Africa and India, respectively. As rising memory costs make this price band unsustainable, the industry may see a reversal of the "more specs for less money" trend of the past decade. Most OEMs focused on the low-end market plan to maintain share by reducing specifications or moving products above the $200 price point. However, in emerging markets, demand at this higher level is limited and unlikely to sustain current shipment volumes. They will also face increased competition from established brands in higher price tiers. Consequently, IDC predicts a significant contraction of the total addressable market (TAM) during the forecast period, with a more concentrated competitive landscape.
Meanwhile, demand for budget smartphones will persist. Price-sensitive consumers may extend the lifespan of their current devices or turn to the more affordable used phone market. In some emerging markets, feature phones may regain share, while the ultra-low-end smartphone segment (below $50) could disappear. Overall, the smartphone market is heading towards a structural reset in terms of scale, product mix, and competitive dynamics.
The trend of memory reduction is particularly concerning for the AI PC category. Despite increased marketing efforts and the integration of dedicated Neural Processing Units (NPUs), AI PCs have so far failed to deliver the transformative capabilities promised to consumers and enterprise users. Use cases remain limited, and the software ecosystem has not kept pace with hardware advancements. As the industry attempts to build a more compelling AI value proposition around the PC, the memory crisis threatens to undermine the foundation required to achieve this. Local AI workloads, including the agentic AI vision of PC-centric systems that can manage and coordinate multiple AI tasks on a user's behalf, are inherently memory-intensive. Reducing RAM configurations not only limits current AI capabilities but also constrains the potential for devices to run local models, manage context windows, and support the data throughput required for future local AI applications.
The policy environment adds another layer of uncertainty. Last week, the U.S. Supreme Court struck down the broad reciprocal tariffs previously implemented by the Trump administration, ruling that the executive authority exceeded statutory limits. The administration subsequently imposed a flat 10% tariff using other legal authorities and is pushing to increase it to 15%. For the device industry, this creates profound uncertainty. A 15% tariff on finished goods and components would add further cost pressure on top of already rising memory prices. Manufacturers will find it difficult to plan pricing, procurement, or inventory strategies with confidence. Some costs will be passed on to consumers, increasing their burden; others will be absorbed by manufacturers and channels, further squeezing profit margins.
In summary, 2026 is shaping up to be a challenging year for the PC and smartphone markets. A deepening memory supply crisis, demand pulled forward by stockpiling, ASP increases suppressing unit growth, and a volatile trade policy environment combine to make accurate forecasting exceptionally difficult. All stakeholders, from semiconductor suppliers to end-point OEMs, channel partners, and enterprise buyers, should prepare for sustained turbulence. This is not a quarterly disruption but a structural shift that will continue to impact the market through 2027.