Global Memory Chip Shortage Triggers Record Contraction in Smartphone Market

Published on 28/2/2026

The global smartphone industry is facing its steepest decline on record as an unprecedented shortage of memory chips—driven by surging demand for artificial intelligence infrastructure—continues to disrupt supply chains and reshape the competitive landscape, according to a stark new forecast from the International Data Corporation (IDC).

In a report released on February 27, the research firm dramatically revised its 2026 outlook, now projecting that global smartphone shipments will fall to approximately 1.1 billion units. This represents a 12.9% decline from the 1.26 billion units shipped in 2025, erasing years of gradual market gains and marking what IDC calls “a crisis like no other”

“The tariffs and pandemic crisis seem a joke compared to this,” said Nabila Popal, senior research director at IDC, in a statement accompanying the report. “The smartphone market will witness a seismic shift by the time this crisis is over—in size, average selling prices and competitive landscape. We don’t expect the situation to ease up until mid-2027, at least”.

Industry analysts point to a fundamental realignment in the semiconductor industry as the root cause of the shortage. The explosive growth of artificial intelligence has led hyperscale data center operators—including Microsoft, Google, Meta, and Amazon—to consume vast quantities of advanced memory components.

Chip manufacturers such as Samsung Electronics, SK Hynix, and Micron Technology have increasingly shifted their production capacity toward high-bandwidth memory (HBM) and other enterprise-grade components used in AI servers, which offer higher profit margins than standard chips. This reallocation has constrained the supply of both DRAM, used for processing tasks, and NAND flash memory, used for storage, for consumer devices.

The supply-demand imbalance has been further exacerbated by aggressive stockpiling. SK Hynix recently indicated that its DRAM and NAND inventories have dwindled to approximately four weeks, with all of its 2026 high-bandwidth memory capacity already sold out .

The severity of the supply shock has caught even the most pessimistic forecasters off guard. IDC noted that the current outlook is significantly worse than the “moderate” and “pessimistic” scenarios it had modeled just a few months ago in December 2025 .

Counterpoint, another research firm, issued a similarly dire forecast, predicting a 12.4% decline for 2026. “2026 is shaping up to be the worst year in smartphone history,” Counterpoint analyst Yang Wang said. “The industry has never seen a drop this steep”.

The personal computer market is also feeling the strain, though with slightly different dynamics. IDC now forecasts that global PC shipments will contract by 11.3% in 2026. However, due to rising average selling prices, industry revenue is still expected to grow by 1.6% .

The impact of the memory shortage is not being felt equally across the industry. Analysts warn that the crisis is likely to accelerate market consolidation, with larger players like Apple and Samsung better positioned to weather the storm.

Entry-level and budget Android devices are bearing the brunt of the cost increases. For these phones, memory represents a larger share of the total material cost, squeezing already thin profit margins. IDC estimates that in 2025, there were roughly 170 million smartphones shipped that cost below $100—a segment the firm now considers “uneconomical to maintain” .

“The days of cheap smartphones are gone,” Popal declared. “Even when the crisis is over, we don’t expect memory prices to go back down to 2025 levels” . Manufacturers are responding by reining in specifications, eliminating unprofitable entry-level models, and pushing consumers toward more premium, higher-margin devices .

Sources:

https://www.theedgesingapore.com/news/semiconductor/smartphone-market-set-shrink-13-due-memory-chip-crisis-idc-says

https://www.sohu.com/a/990434730_222256?scm=10001.325_13-325_13.0.0-0-0-0-0.5_1334&spm=smpc.channel_248.block3_308_NDdFbm_1_fd.1.1772137514642XBQL0iC_324

http://big5.china.com.cn/gate/big5/finance.china.com.cn/industry/20260227/6295639.shtml

https://wccftech.com/nvidia-dgx-spark-700-usd-price-hike-memory-shortages-4699-new-pricing/

https://www.thepaper.cn/newsDetail_forward_32666234