The global smartphone market is on track for its most significant decline ever in 2026, with shipments expected to fall 12.9% to 1.12 billion units. This downturn is driven by a surge in memory chip prices, which are increasing device costs and impacting manufacturers, particularly those focused on lower-end Android devices.
Tech giants like Meta, Google, and Microsoft are capturing a large portion of memory chip supply for AI infrastructure, diverting components away from consumer electronics and driving up prices. Memory chips, essential for smooth smartphone operation, are now prioritizing higher-margin data centers.
Analysts predict that rising component expenses will force budget-focused companies to pass costs onto consumers, coinciding with weakening demand for higher-priced devices. IDC suggests that Apple and Samsung, with their stronger financial positions and premium market focus, are better equipped to weather this storm and potentially gain market share.
The average selling price for smartphones is forecast to jump 14% to a record $523 this year as manufacturers shift towards more profitable models to offset escalating costs. While a modest recovery is anticipated in 2027 and 2028, the market may not return to previous shipment levels. IDC warns that the sub-$100 smartphone segment could become permanently uneconomical, even after memory prices stabilize.