AI-driven memory shortage pushes smartphone sales toward record decline in 2026

The global smartphone market is on track for its steepest annual decline in over a decade, as the AI-fueled memory chip shortage continues to drive up device prices and squeeze consumers out of the market.

Omdia, a market research firm, forecasts that worldwide smartphone shipments will contract 12% year-over-year in 2026 to roughly 1.097 billion units, with a mild recovery not expected until 2028. The GSMA, in its 2026 State of Mobile Internet Connectivity report, projects an even sharper 14% drop — what it calls the steepest decline in smartphone sales ever recorded. IDC has offered a still-grimmer outlook, forecasting a 16.7% decline to just over 1 billion units.lightreading+3

The 'RAMageddon' Effect

The culprit is a global shortage of memory chips — dynamic random access memory (DRAM) and NAND flash storage — caused by insatiable demand from AI data centers. The phenomenon, widely dubbed "RAMageddon," has sent component prices soaring. DRAM prices are expected to rise 400% by year's end compared to 2024 levels, according to J.P. Morgan JPMorgan Chase & Co. ↘ 0.73%, with the cost pressure falling hardest on lower-end devices where memory accounts for roughly half the total cost.mashable+2

Goldman Sachs ↘ 1.38% this week cut its global smartphone shipment projections, now forecasting 1.1 billion units in 2026, down 10% year-over-year. Despite falling volumes, the bank expects the smartphone market's total value to grow 8% to $624 billion in 2026, driven by higher average selling prices and growing demand for premium devices above $600. Omdia's Liu Yixuan noted that vendors are abandoning the pursuit of shipment scale and prioritizing profitability, with the low-end segment shrinking rapidly while mid-to-high-end demand grows.chinadaily+2

Emerging Markets Hit Hardest

The price surge threatens to widen the digital divide. The GSMA warned that in sub-Saharan Africa, where device cost is already the single largest barrier to mobile Internet access, an entry-level smartphone costs about 76% of the average monthly income for the poorest 40% of the population. Globally, 3.1 billion people were covered by a mobile network in 2025 but were not using it.lightreading

The GSMA this week launched an initiative with the Partnership for Digital Access in Africa aimed at connecting 1 billion people on the continent by 2030, seeking to accelerate the transition from 2G and 3G feature phones to smartphones. Getting device costs down to between $20 and $30 would make them affordable to an additional 1.6 to 2.2 billion people, the organization estimates.lightreading

No Quick Relief

Major manufacturers including Apple ↘ 0.80%, Google Alphabet Inc. ↘ 3.58%, and Samsung have all raised prices on new releases this year. Goldman Sachs does not expect shipment volumes to recover meaningfully until 2028, when it projects 1.2 billion units. In the meantime, foldable phones and AI-enabled devices are emerging as the key innovation tracks vendors are betting on to sustain market value.investing+2