Research firm IDC has revised its outlook for the smartphone market sharply lower, projecting a 12.9% contraction in 2026 tied to an acute shortage of memory chips. The updated forecast anticipates roughly 1.1 billion mobile shipments in 2026, down from 1.26 billion a year earlier, erasing years of incremental growth.
IDC attributes the disruption to heightened demand for advanced memory components needed to service artificial intelligence workloads. That demand has siphoned off available supply, sustaining elevated component prices and pressuring the cost base for device makers.
Smartphone manufacturers are responding to the changed inputs by adjusting product strategies. According to IDC, companies are lowering specifications on forthcoming devices, discontinuing entry-level models that no longer meet profitability thresholds and nudging buyers toward more premium offerings.
"The tariffs and pandemic crisis seem a joke compared to this," said IDC Senior Research Director Nabila Popal. "The smartphone market will witness a seismic shift by the time this crisis is over - in size, average selling prices and competitive landscape. We don’t expect the situation to ease up until mid-2027, at least."
The forecast represents a notable revision from earlier estimates and serves as the latest assessment of a memory crunch that has affected multiple corners of the electronics supply chain. With advanced memory prioritized for AI applications, IDC indicates constrained availability will persist into 2027, leaving manufacturers to navigate higher component costs and reconfigured product lineups.
Market participants will be watching shipment figures and component pricing closely as indicators of when conditions may normalize. For now, IDC’s view is that the shortage will materially reshape market size, average selling prices and competitive dynamics through the period of constrained supply.