Editorial illustration for Smartphone sales plunge as memory costs stay high, sub‑USD 100 phones shrink
Smartphone Sales Crash as Memory Costs Remain High
Smartphone sales plunge as memory costs stay high, sub‑USD 100 phones shrink
Smartphone shipments are sliding faster than any downturn seen in the past decade, and the pressure isn’t coming from demand alone. Manufacturers are wrestling with component costs that have stubbornly refused to budge, especially the price of flash memory that powers everything from entry‑level models to flagship devices. As the cost curve flattens, the margins on phones sold for less than $100 are being squeezed tighter than ever.
Analysts at IDC point to a widening gap between the price of storage chips and the retail price ceiling that budget brands can sustain. The ripple effect is already visible: inventory levels are rising, promotional discounts are deepening, and several low‑cost lines are being trimmed or discontinued. Adding to the uncertainty, a rumor circulating for next week suggests Apple may unveil a new, stripped‑down version of its budget handset—a move that could signal how even premium makers are feeling the strain.
In that context, Nabila Popal’s assessment of memory pricing and the outlook for sub‑$100 phones carries particular weight.
"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.
The IDC forecast paints a stark picture: shipments are set to tumble 12.9 percent in 2026, the steepest slide in more than ten years. RAM‑driven cost pressure is the chief culprit, with AI‑heavy workloads chewing through memory supplies. “While memory prices are projected to stabilize by mid‑2027, they are unlikely to return to previous level,” Nabila Popal notes, underscoring a structural shift.
Consequently, the sub‑$100 segment looks set to become “permanently uneconomical,” according to the same analysis. Apple’s rumored budget launch next week may offer a brief flash of optimism, yet whether it can offset broader market weakness remains unclear. Consumers could face higher price points across the board, especially if manufacturers choose to trim features rather than absorb costs.
The industry’s response—whether through new pricing models, alternative component sourcing, or redesigns—has yet to materialize. In short, the data suggests a challenging year ahead, with the long‑term impact of elevated memory costs still uncertain.
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
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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.