RAM shortage to trigger historic smartphone shipment decline

RAM shortage to trigger historic smartphone shipment decline

The global smartphone market is set to witness a major downturn, with shipments expected to drop by 12.9% this year.

The decline comes as a result of an ongoing RAM shortage, fueled by the rising demand for computers and data centers to power artificial intelligence (AI).

The prediction was made by analyst firm IDC, which expects this year will see the largest single-year decline in over a decade.

Memory crisis marks structural reset of market

IDC's senior research director, Nabila Popal, said the memory crisis is not just a temporary dip but a structural reset of the entire market.

She added that it will fundamentally reshape the long-term total addressable market (TAM), vendor landscape, and product mix.

The shortage has also led to an expected 14% increase in average retail price of smartphones this year.

It could lead to consolidation in smartphone market

Popal also said that the memory shortage could lead to consolidation in the smartphone market as smaller players may exit.

Low-end vendors are likely to face sharp shipment declines amid supply constraints and lower demand at higher price points.

Despite a record drop in shipments, smartphone average selling price (ASP) is projected to rise 14% this year, reaching a record $523.

Sub-$100 smartphones 'permanently uneconomical'

The rising component costs due to the RAM shortage could also make sub-$100 smartphones "permanently uneconomical," effectively pricing out manufacturers who produce devices at that price point.

IDC expects shipments in the Middle East and Africa to fall by over 20% year-on-year, while China and Asia Pacific (excluding Japan) will see declines of 10.5% and 13.1%, respectively.

RAM prices expected to stabilize by mid-2027

IDC predicts that RAM prices will stabilize by mid-2027.

This prediction comes as the firm revises its mobile shipment estimates for 2026, projecting a year-on-year decline of 13%.

The decline would not only mark the first year-on-year drop since 2023 but also be one of the worst smartphone sales dips in nearly two decades.