IDC warns smartphone shipments to fall on memory shock

Worldwide smartphone shipments are set to fall 12.9% in 2026 to 1.1 billion units, according to IDC. That would mark the market's sharpest annual decline on record.

The forecast is a sharp downgrade from IDC's previous outlook and would leave global smartphone shipments at their lowest annual level in more than a decade. The group attributed the decline to a memory shortage that is raising component costs across the consumer electronics sector.

Android device makers are expected to face the greatest pressure, particularly those focused on lower-priced handsets. Rising memory costs are squeezing margins, leaving many manufacturers with little room to absorb the increase without passing it on to consumers.

Apple and Samsung, by contrast, are better placed to cope with the disruption. IDC expects larger suppliers with stronger positions in premium and mid-market devices to face less strain than smaller rivals serving the lowest price bands.

Francisco Jeronimo, Vice President for Worldwide Client Devices at IDC, said the disruption went beyond a short-term supply crunch.

"What we are witnessing is not a temporary squeeze, but a tsunami-like shock originating in the memory supply chain, with ripple effects spreading across the entire consumer electronics industry," Jeronimo said.

He said the impact would be uneven across vendors.

"The global smartphone market, particularly Android manufacturers, faces a significant threat. Vendors whose business is mainly at the low end of the market are likely to suffer the most. Rising component costs will hit their margins, and they will have no choice but to pass the costs on to end users. By contrast, Apple and Samsung are better positioned to navigate this crisis. As smaller and low-end-positioned Android vendors struggle with rising costs, Apple and Samsung could not only weather the storm but potentially expand market share as the competitive landscape tightens," Jeronimo said.

Price shift

IDC expects the disruption to reshape not only shipment volumes but also pricing and product mix. Average smartphone selling prices are forecast to rise 14% this year to a record USD $523.

That increase reflects how much harder it has become to produce low-cost devices profitably as memory costs climb. IDC estimates the sub-USD $100 segment at 171 million devices and says it is likely to become permanently uneconomical, even after memory prices stabilise.

Nabila Popal, Senior Research Director for IDC's Worldwide Quarterly Mobile Phone Tracker, said the market was undergoing a lasting shift rather than a brief downturn.

"The memory crisis will cause more than a temporary decline; it marks a structural reset of the entire market, fundamentally reshaping long-term TAM (Total Addressable Market), the vendor landscape, and the product mix," Popal said.

She said smaller manufacturers and lower-priced models would be hit especially hard.

"We expect consolidation as smaller players exit, and low-end vendors face sharp shipment declines amid supply constraints and lower demand at higher price points. Although shipments will witness a record drop, Smartphone ASP is projected to rise 14% to a record $523 this year. While memory prices are projected to stabilize by mid-2027, they are unlikely to return to previous level - making the sub-$100 segment (171 million devices) permanently uneconomical. In short, there is no return to business as usual for vendors and consumers," she said.

Regional impact

The downturn is expected to hit hardest in markets where low-end smartphones make up a large share of sales. IDC forecasts the steepest decline in the Middle East and Africa, where shipments are expected to fall 20.6% year on year.

China, the world's largest smartphone market, is forecast to decline 10.5%. Asia Pacific excluding Japan and China is expected to fall 13.1%, highlighting the broad pressure across major emerging markets where lower-cost Android handsets have historically driven volumes.

The figures point to a sharper contraction in regions where consumers are more sensitive to handset price increases. Vendors with weaker pricing power in those markets may struggle to maintain volumes as component inflation feeds through to retail prices.

IDC expects conditions to begin easing in 2027 as the supply shock starts to stabilise. It forecasts a modest 2% recovery in smartphone shipments in 2027, followed by a 5.2% rise in 2028.

Even with that rebound, the outlook suggests the post-crisis market will look different, with fewer low-cost devices, higher average prices, and greater pressure on smaller Android brands.