Memory crunch threatens smartphone market: prices to rise, cheap phones disappear

The looming memory crisis

For some time, whispers of a memory crisis have circulated within the tech industry. While it hasn’t dramatically impacted the smartphone market yet, that’s about to change. A new report suggests the situation could be worse than previously anticipated, with significant repercussions for manufacturers and consumers alike. The rising cost and dwindling availability of memory chips are poised to reshape the landscape of mobile technology.

Idc's concerning forecast

According to a recent forecast by IDC, the global memory shortage will trigger a substantial 12.9% decline in smartphone sales by 2026. They predict roughly 1.1 billion smartphone shipments that year, a significant drop from the 1.26 billion expected in 2025. This shortfall is primarily attributed to the ongoing and expected protracted memory shortage, extending well into 2027.

Availability: the core issue

Cristiano Amon, CEO of Qualcomm, highlighted that the key challenge isn't just price, but the sheer availability of memory. He stated, “Memory availability will determine the overall size of the handset market.” This underscores the gravity of the situation, as even if prices stabilize, a lack of supply will continue to constrain production and impact sales figures across the industry.

Impact on android manufacturers

Android manufacturers are expected to bear the brunt of the increased costs. The higher prices of both DRAM and NAND chips, crucial for processing and storage respectively, will significantly impact the cost of materials. This is particularly concerning for entry-level devices from companies like Xiaomi and Oppo, where profit margins are already thin. Fewer models are likely to be produced as a result of these increased expenses.

Apple's potential resilience

Conversely, Apple appears to be in a more advantageous position. The iPhone's strong presence in the premium segment provides higher profit margins, enabling the company to absorb the increased memory costs more easily. While Tim Cook noted minimal impact on margins in late 2025, he acknowledged a larger effect in the first quarter of 2026. Apple may avoid raising iPhone 18 Pro prices, demonstrating their financial stability.

The end of affordable smartphones?

IDC predicts that the memory shortage will persist even after supplies normalize, meaning smartphone prices are unlikely to return to 2025 levels. This signals a potential shift towards a permanent increase in prices, particularly for budget-friendly devices. Nabila Popal, IDC Senior Research Director, succinctly put it: “The days of cheap smartphones are gone.”

Which devices will be most affected?

The most significant impact will be felt in the lower price tiers. In 2025, 170 million smartphones shipped cost less than $100. IDC believes this price segment is now economically unsustainable to maintain, forcing manufacturers to either raise prices or reduce production in this category.

A table summarizing the key impacts