The smartphone market is set to collapse significantly over the coming year as a direct result of memory shortages. IDC predicts that recovery will take years.
In the coming year, the number of smartphones shipped will drop by 12.9 percent to 1.1 billion phones, according to IDC’s forecast. This marks the largest predicted decline the smartphone market has ever faced. Volume is shrinking to a level not seen in over a decade.
Memory shortage
The decline is a direct result of memory shortages in the supply chain, a problem that has already triggered previous warnings for the smartphone market. Manufacturers can no longer obtain sufficient memory at a fair price. This threatens to be particularly problematic for Android manufacturers. After all, they produce devices in the entry-level and mid-range segments, where the skyrocketing cost of RAM has a greater impact.
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For manufacturers of entry-level models under a hundred dollars, IDC predicts a permanent shift. Such devices are especially popular in emerging markets. The price of memory is making them unprofitable to produce. Even when memory prices stabilize, likely around 2027, the segment will remain unprofitable.
The impact of the market contraction will therefore be felt most acutely in regions where budget phones are essential. IDC expects the market in the Middle East and Africa to shrink by 20.6 percent compared to 2026.
IDC predicts a slow recovery of the global market starting from 2027, though it will not return to 2025 levels within this decade.
Impact on the higher segment
The impact on premium devices remains to be seen. Chinese manufacturers pack their phones with high-end components to attract customers. These devices have healthy sales margins, though they are not infinite. Apple traditionally sells its iPhones with very large profit margins and could, in theory, absorb a RAM price increase most effectively.
The market contraction has broader repercussions. Qualcomm, which supplies smartphone processors, is also seeing a decline in demand. “We just wish there was more memory,” says CEO Cristiano Amon. Unless Amon had a major falling star in his sights while making his wish, it doesn’t look like it will come true anytime soon.