Due to a severe RAM shortage brought on by the growing demand for computers and data centers to support AI, memory costs are skyrocketing. According to analysis firm IDC, this will result in a 12.9% decline in smartphone shipments this year, the largest decline in a single year in over ten years.
Manufacturers shipped 1.26 billion devices in 2025, according to a forecast released earlier this year by IDC.According to the company, that amount will only reach 1.12 billion this year.
The memory crisis will cause more than a temporary decline; it marks a structural reset of the entire market, fundamentally reshaping the long‑term TAM [total addressable market], the vendor landscape, and the product mix,” said Nabila Popal, senior research director with IDC’s Worldwide Quarterly Mobile Phone Tracker, in a statement.
According to Popal, the average retail price of a smartphone is predicted to increase by 14% due to the memory shortage.
Due to supply limitations and decreased demand at higher price points, we anticipate consolidation as smaller companies leave and low-end providers experience steep shipping losses.The average selling price (ASP) of smartphones is expected to increase 14% to a record $523 this year, despite volumes seeing a record decline, she continued.
Additionally, Popal pointed out that growing component costs would render smartphones under $100 “permanently uneconomical,” driving away phone manufacturers who produce such devices.
According to the company, shipments in the Middle East and Africa will decrease by more than 20% annually as a result of this trend.There will also be 10.5% and 13.1% drops in China and the larger Asia Pacific area (except from Japan), respectively.
According to IDC, RAM costs should level off by the middle of 2027.
Although it predicted a lower drop of only 2.6%, another analytics group, Counterpoint, also predicted a loss in smartphone shipments last year.
Carl Pei, the CEO and cofounder of Nothing, also issued a warning earlier this year that as smartphone memory costs increase, smartphones will cost more in 2026.Brands now have to decide whether to lower specifications or hike prices by 30% or more in certain situations.In 2026, the “more specs for less money” business model that many value brands were founded on is no longer viable, he claimed.
Because of this, some marketsespecially entry and midtier segmentsare probably going to contract by 20% or more, and brands that have traditionally controlled these sectors will face difficulties, Pei continued.
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