Global Smartphone Market Braces for Historic Downturn in 2026
The global smartphone industry is on the brink of its most severe contraction ever, with shipments projected to plummet by 12.9% to 1.12 billion units in 2026, according to a new analysis from International Data Corporation (IDC). This figure represents the lowest shipment volume in more than a decade, signaling a profound structural reset for the sector.
Memory Chip Crisis Drives Unprecedented Decline
IDC analysts attribute this sharp downturn primarily to surging prices of memory chips, specifically DRAM, which are essential for powering advanced smartphone applications. Francisco Jeronimo, IDC’s Vice President for Worldwide Client Devices, emphasized the severity of the situation, stating, “What we are witnessing is not a temporary squeeze, but a tsunami-like shock originating in the memory supply chain.”
The rapid expansion of artificial intelligence infrastructure by major technology firms such as Google, Meta, and Microsoft has diverted a significant portion of the memory chip supply to data centers. This shift has created a severe shortage for consumer devices, leading to skyrocketing costs that are now cascading through the smartphone market.
Impact on Manufacturers and Market Dynamics
The crisis is expected to disproportionately affect low-end Android manufacturers, many of which may be forced to either pass the increased costs onto consumers or exit the market entirely. In contrast, industry giants like Apple and Samsung, with their robust financial positions and premium brand appeal, are anticipated to consolidate market share during this turbulent period.
IDC forecasts that the average selling price of smartphones will surge by 14% to a record high of $523 this year. Manufacturers are increasingly shifting their focus toward higher-margin models in an effort to offset the ballooning costs associated with memory components.
Long-Term Outlook and Structural Changes
While IDC projects a modest recovery of 2% in 2027 and a 5.2% rebound in 2028, analysts caution that the market will not return to its previous norms. Nabila Popal, Senior Research Director at IDC’s Mobile Phone Tracker, explained, “The memory crisis will cause more than a temporary decline; it marks a structural reset of the entire market.”
She further highlighted that the sub-$100 smartphone segment, which currently accounts for approximately 171 million devices, is likely to become “permanently uneconomical” even after memory prices stabilize by mid-2027. This shift underscores a fundamental transformation in the industry’s economics, driven by ongoing supply chain pressures and evolving consumer demands.
The global smartphone market’s trajectory now hinges on how manufacturers adapt to these new realities, with innovation and cost management becoming more critical than ever in navigating the challenges ahead.
