TLDR
- IDC expects global smartphone shipments to fall 13% in 2026 to about 1.1 billion units.
- The market had grown 6% in 2024 and 2% in 2025 before the projected 2026 decline.
- Around 170 million smartphones under $100 shipped last year, but that tier is now under pressure.
- IDC says average selling prices may rise 14% in 2026 to a record $523.
- Memory shortages are expected to continue into mid-2027, keeping component costs elevated.
Global smartphone shipments are set for a sharp fall in 2026, according to IDC. The market is expected to drop 13% year on year to about 1.1 billion units. That would mark the steepest annual decline on record. The downturn follows growth of 6% in 2024 and 2% in 2025, and it reflects a rapid rise in memory costs.
Memory Shortage Pushes Costs Higher Across the Market
IDC said the main pressure point is memory. Prices for key components have climbed, and that has raised production costs across the smartphone sector. As a result, vendors are pulling back from entry-level devices, especially in markets where price remains the main factor in buying decisions.
Last year, about 170 million smartphones shipped for under $100. IDC now says that segment is becoming uneconomical to maintain. Manufacturers are focusing on models with stronger margins instead, and that is shifting the market toward more expensive devices. The change comes as memory supply remains tight and as producers give more capacity to higher-value products.
Data center demand for advanced memory has increased sharply in 2026. That has reduced the supply available for mainstream mobile components and kept pricing under pressure. IDC described the shift as a “permanent reallocation.” It said average selling prices are likely to rise 14% in 2026 to a record $523. Even after supply improves, memory prices are not expected to return to 2025 levels.
Entry-Level Smartphones Face Deeper Pressure
The under-$100 category is under the most strain because it has the least room for higher parts costs. When component prices rise, small changes can erase profit on low-cost models. That is why entry-level devices are often the first to be cut from lineups. For consumers, the result is likely to be fewer low-priced choices and longer replacement cycles.
Many buyers in emerging markets use low-cost phones for basic communication, work, and payments. If those options shrink, users may keep older phones for longer or move to financing plans for higher-priced models. Phone makers have been moving toward premium products for several years, and the memory shortage has accelerated that trend.
The market is now being reshaped by product mix as well as by weaker shipment volumes. A lower unit count does not mean all demand has disappeared, but it does mean affordability is changing. IDC expects the shortage to continue into mid-2027. That timeline suggests pricing pressure may last longer than one product cycle. It also means the recovery path for budget devices remains uncertain.
AI Memory Demand Reshapes the Supply Chain
A large share of advanced memory capacity is now going to AI servers and data centers. Producers such as Samsung, SK Hynix and Micron have prioritized high-bandwidth memory because returns are stronger than in consumer DRAM. That has reduced the incentive to expand lower-margin supply for phones.
Industry data cited by IDC shows the smartphone market is now competing with AI infrastructure for memory resources. That competition has changed allocation decisions across the supply chain. It has also pushed phone-grade memory lower in the priority order.
The 2026 decline therefore reflects more than weaker handset demand. It also reflects a structural change in where semiconductor capacity is being deployed. For smartphone vendors, the near-term response is clear: fewer ultra-low-cost devices and a stronger push into higher-priced tiers.
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