The global smartphone market is on track for its worst year ever as the AI-driven memory shortage continues to hammer sales.
According to analysis firm International Data Corporation (IDC), smartphone shipments are headed for a 13.9% decline in 2026, a downward revision from the 12.9% decline IDC had anticipated for the year in February. It would also mark the steepest drop in smartphone history, the company said.
The worldwide memory crunch has left the tech industry scrambling for chips, driving up costs and forcing some smartphone companies to raise prices or kill certain configurations entirely.
The war between the US and Iran has only further inflamed the situation, as increased shipping costs add to the pain.
“Combined, these pressures are compelling vendors to reduce shipments, raise prices and concentrate on higher price tiers — elevating smartphone [average selling price] to a record $550, up $100 from last year,” IDC senior research director Nabila Popal said in a statement.
“2026 will be a defining year for the industry as [a] new reality of structurally higher costs take hold,” she added. “For consumers, it means the era of ultra-cheap smartphones is over. For vendors, it means only those that can adapt their strategies to this new cost environment and sustain demand at elevated price points will survive.
The broader Android (GOOG, GOOGL) smartphone market is set to take the biggest hit, with IDC projecting a 20% year-over-year drop in shipments. Despite that, Samsung (005930.KS) is expected to increase its market share in the space at the expense of smaller smartphone companies thanks to its midrange and premium device lineups.
Apple (AAPL), the research firm said, is also expected to perform relatively well, with shipments forecast to fall 5.2% on the year, an improvement from a previously anticipated decline of 8.1%.
In its most recent earnings report, Apple announced iPhone revenue growth of 20% for the second consecutive quarter, thanks to its strong iPhone 17 lineup and improved sales out of China.
But CEO Tim Cook also warned of supply constraints due to both the memory shortage and the dearth of iPhone processors.
That, Cook said, will have an impact on Apple’s margins moving forward.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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