Editorial illustration for Smartphone sales plunge as memory costs stay high, sub‑USD 100 phones shrink
Smartphone Sales Crash as Memory Costs Remain High
Memory is too expensive to waste on cheap phones.
The industry is learning this the hard way. Global smartphone sales are in free fall. The reason is brutally straightforward: every dollar that used to go into a sub-$100 handset is now being funneled into the memory chips powering AI data farms.
Microsoft, Amazon, Google, and OpenAI are buying them by the warehouse. There's nothing left for anyone else.
IDC's latest report paints a grim picture. The sub-$100 phone is now a money-losing proposition. It is being phased out of existence.
Next week, Apple is expected to show the new floor with its rumored "iPhone 17e." It will be a budget model, but only by Apple's standards. It won't be cheap.
"While memory prices are projected to stabilize by mid-2027, they are unlikely to return to previous level," IDC senior researcher Nabila Popal says, adding that the sub-$100 phone segment will become "permanently uneconomical." Next week, Apple is rumored to announce a new edition of its budget smartphone as the "iPhone 17e," which could give a hint about where things are going. The RAM shortage is going to affect much more than just smartphones as big AI companies like Microsoft, Amazon, OpenAI, and Google continue to buy up most of the available memory chips for use in AI datacenters. We're already seeing the immediate impact of the shortage with price hikes coming for devices from Raspberry Pi, Framework, and even Samsung, but reports suggest that the crunch may push back the launch of certain products, like the PlayStation 6 and Meta's next headset. The memory shortage is expected to impact budget-friendly Android smartphones the most, as the rising costs of components leave them with "no choice but to pass the costs on to end users," Francisco Jeronimo, the vice president for IDC's Worldwide Client Devices, says in the report.
This is a wholesale realignment. The collapse isn't temporary. IDC says prices stabilize in 2027, not fall.
The old baseline is gone. The squeeze extends far beyond phones. Raspberry Pi and Framework laptops are already getting more expensive.
The PlayStation 6 might be delayed. The entire consumer tech stack is being repriced from the component up. The market isn't shrinking.
It is bifurcating. On one side, premium devices that can absorb the cost. On the other, a vast empty space where affordable technology used to be.
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Common Questions Answered
How are smartphone shipments being impacted by current memory costs?
Smartphone shipments are experiencing their steepest decline in a decade, with component costs, especially flash memory prices, playing a significant role in the downturn. The persistent high memory costs are squeezing margins, particularly for budget smartphones under $100, making them increasingly difficult to produce profitably.
What does IDC predict about the future of sub-$100 smartphone segment?
IDC senior researcher Nabila Popal suggests that the sub-$100 phone segment will become 'permanently uneconomical' due to ongoing memory cost pressures. The forecast indicates that while memory prices might stabilize by mid-2027, they are unlikely to return to previous levels, fundamentally changing the economics of budget smartphone production.
How are AI workloads contributing to the smartphone market challenges?
AI-heavy workloads are consuming significant memory supplies, which is exacerbating the RAM shortage and driving up component costs for smartphone manufacturers. This increased demand is not only affecting smartphone production but is expected to impact broader technology markets, with IDC projecting a 12.9 percent decline in shipments in 2026.
Further Reading
- The RAM shortage is causing a smartphone 'crisis like no other market shrink' — 9to5Google
- DRAM Shortage Will Cause 'Seismic Shift' in Smartphone Market, But Apple Will Be Less Affected — MacRumors
- Papers with Code - Latest NLP Research — Papers with Code
- Hugging Face Daily Papers — Hugging Face
- ArXiv CS.CL (Computation and Language) — ArXiv
