Mikkel Christensen
Smartphone buyers may soon pay more — even as the market shrinks at a historic pace
Smartphone buyers may soon pay more — even as the market shrinks at a historic pace. A worsening memory supply crunch is driving up device costs while pushing global shipments toward their steepest annual drop on record.
The shift signals a fundamental change in how the industry competes, particularly at the lower end of the market.
prices rise as volumes fall
In its February update, the International Data Corporation said average smartphone selling prices are projected to climb 14% in 2026 to a record $523.
At the same time, global shipments are forecast to fall 12.9% year over year to about 1.1 billion units, a level not seen in more than a decade. The firm described the new outlook as a significant downward revision from its late-2025 projection, reflecting escalating constraints in the memory supply chain.
Higher memory costs disproportionately affect budget devices, where profit margins are thinner and there is limited room to absorb component increases without raising retail prices.
shakeout in low end
IDC expects the pressure to accelerate consolidation among smaller Android manufacturers focused on entry-level phones. Vendors concentrated in the sub-$100 category, once totaling 171 million units annually, face mounting challenges as production economics deteriorate.
Nabila Popal, senior research director at IDC, said the disruption goes beyond a short-term correction. “The memory crisis will cause more than a temporary decline; it marks a structural reset of the entire market,” she said.
She added that while memory prices could begin stabilizing by mid-2027, they are unlikely to return to earlier levels, reshaping the long-term product mix and total addressable market.
regional strain and recovery
The impact is expected to be uneven. The Middle East and Africa are forecast to record the sharpest contraction at 20.6%, reflecting strong reliance on affordable smartphones. China is projected to decline 10.5%, while Asia Pacific excluding Japan and China may fall 13.1%.
Francisco Jeronimo, IDC’s vice president for worldwide client devices, characterized the supply disruption as a shock reverberating across consumer electronics, with Android vendors particularly exposed. He said larger manufacturers such as Apple and Samsung are better positioned to withstand the turbulence and could expand share as competitors retrench.
IDC anticipates a modest 2% rebound in 2027, followed by 5.2% growth in 2028 as supply conditions gradually improve.
Sources: International Data Corporation (IDC)
