Why will smartphone shipments drop in 2026?

Memory shortages are reshaping the device market

Analyst forecasts point to a sharp contraction in global smartphone shipments in 2026, driven largely by a severe shortage and price surge for DRAM and other memory components. Firms that supply servers and cloud datacenters to power AI workloads are bidding up the same memory pools phone makers rely on, leaving manufacturers with limited capacity and sharply higher input costs.

IDC and other forecasters project the industry will shrink by roughly double‑digit percentages year over year — the largest single‑year decline on record. The crunch hits across the supply chain:

• memory contract and spot prices have climbed, raising bill‑of‑materials costs for entry and midrange phones;
• lead times and capacity constraints force OEMs to cut planned production; and
• manufacturers prioritize higher‑margin flagship lines and enterprise orders, squeezing cheaper models that sustain unit volume.

What this means in practice

Consumers can expect higher starting prices and fewer genuinely budget devices. Phone makers may delay launches or reduce features to squeeze costs, and carriers and retailers could see lower promotional stock. For regions that depend on low‑cost handsets for first‑time buyers, the shortage risks slowing adoption.

Longer term, the memory imbalance may encourage strategic changes: suppliers could expand capacity for mobile‑grade memory, governments and industry groups might push for supply‑chain diversification, and vendors could redesign devices to use less memory. For now, however, the memory demand from AI infrastructure is forcing a difficult trade‑off: faster progress in datacenter compute versus cheaper, more widely available consumer devices.