Global RAM Shortage To Cause Significant Smartphone Shipment Dip
The growing need for computers and data centers to power Artificial Intelligence (AI) is causing a massive shortage of Random Access Memory (RAM), which in turn is driving up memory prices significantly. Analyst firm IDC predicts that this RAM scarcity will result in a 12.9% decrease in smartphone shipments this year. This dip represents the most substantial annual decline in over a decade. Hours after IDC released its report, another analyst firm, Counterpoint, made a similar prediction, estimating the market would fall by 12% this year.
Structural Reset of the Market
According to IDC, manufacturers shipped 1.26 billion devices in 2025. However, the firm predicts this figure will drop to just 1.12 billion this year, indicating a significant contraction in the market. Nabila Popal, principal research director at IDC’s Worldwide Quarterly Mobile Phone Tracker, believes that the memory crisis will result in more than just a temporary decline. She anticipates a structural reset of the entire market, fundamentally reshaping the total addressable market, vendor landscape, and product mix.
Image credits:IDC
Rising Smartphone Prices
Due to the lack of memory, the average retail price of a smartphone is expected to increase by 14%, according to Popal. The scarcity of RAM will push smaller players out of the market, and low-end suppliers will face sharp declines in shipments amid supply constraints and falling demand at higher price points. The average selling price (ASP) of smartphones is expected to rise by 14% to a record $523 this year. This cost increase could make the manufacturing of sub-$100 smartphones “definitely unprofitable,” thereby eliminating phone makers that produce devices at this price point.
Impact on Global Shipments
IDC reports that this trend will significantly impact shipments to the Middle East and Africa, projecting a fall of more than 20% year-on-year. Similarly, China and the broader Asia-Pacific region (excluding Japan) are also predicted to witness declines of 10.5% and 13.1% respectively.
RAM Prices To Stabilize by 2027
Despite the current challenges, IDC expects RAM prices to stabilize by mid-2027. In contrast, Counterpoint anticipates that high-end smartphones will be more resilient to this change, but the sub-$200 smartphone segment will see a 20% decline.
The impact is expected to continue into the second half of 2027, as it will take several quarters for the expansion in memory supply to materialize. Low-end smartphones will likely be most affected, especially as LPDDR4 supply declines faster than expected. In response to these challenges, OEMs are already delaying launches, streamlining portfolios, and compromising on specifications. Prices have already increased by 10-20% in some Android portfolios as of January 2026, according to Yang Wang, a principal analyst at Counterpoint.
Image credits:Counterpoint
Used Device Market To Benefit
Counterpoint predicts that volatility in handset prices will also lead to a rise in the used device market. This shift will provide consumers with a more affordable alternative to the increasing costs of new devices.
Warning From Nothing CEO
Earlier this year, Carl Pei, co-founder and CEO of Nothing, also warned that smartphones would cost more in 2026 as smartphone memory costs rise. “Brands now face a simple choice: increase prices by 30% or more in some cases, or downgrade specifications. The ‘more spec for less money’ model that many value brands have been built on is no longer viable in 2026,” he said. As a result, Pei expects some markets, particularly entry- and mid-range segments, to decline by 20% or more. Brands that have historically dominated these segments will struggle in the face of these challenges.
Source: TechCrunch
