Smartphone Shipments Set for Steepest Decline in History

The Twin Crises Driving the Collapse

IDC attributes the historic decline to two main causes, both of which have intensified since the start of the year .

The Memory Shortage Crisis

The dominant and longer-running issue is a severe global shortage of memory chips. This crisis began reshaping the market in 2025, as surging demand for DRAM and NAND flash from AI data centers absorbed supply that would normally serve the consumer electronics sector , . The resulting price hikes for components are dramatic. IDC analyst Nabila Popal has described the situation not as a temporary squeeze but as a "tsunami-like shock" originating in the memory market . The impact is most acute for manufacturers of low-end and mid-range phones, which operate on thin margins and cannot absorb the cost increases .

The US-Iran War Compounding the Pressure

While the memory shortage was already dragging the market down, a new geopolitical shock has made a bad situation worse. The IDC's May report explicitly names the US-Iran war as the second major factor constraining growth, adding fresh supply-chain disruptions and macroeconomic headwinds that further dampen consumer demand and manufacturer output .

Prices Soar to a Record High as the Low-End Market Crumbles

Against the backdrop of collapsing volumes, the average selling price (ASP) for a smartphone is projected to rise 14% to a record $523 in 2026 , . Some reports citing the latest IDC data put the figure even higher at $550 . This surge reflects the pass-through of higher memory costs to consumers. As a direct consequence, the market for ultra-cheap, sub-$100 smartphones is rapidly contracting. IDC analysts note that memory prices, even if they stabilize by mid-2027, are unlikely to return to previous levels, making the economic model for the cheapest devices permanently unviable .

Emerging Markets Will Bear the Brunt

The impact of the downturn will not be distributed equally. Markets with a high concentration of price-sensitive consumers and low-end devices are forecast to decline the most. Early forecasts from February and March, which were already dire, broke down the regional impact in stark terms , :

• Middle East & Africa is expected to suffer the steepest drop, with a forecast contraction of 20.6% year-on-year.
• China and the Asia-Pacific region (excluding China and Japan) are also projected to see sharp declines, as low-end vendors in these massive markets face severe shipment cuts.

"Low-end vendors face sharp shipment declines amid supply constraints and lower demand at higher price points," IDC noted . The end of the affordable device era is set to push many smaller players out of the market, leading to consolidation among the giants with economies of scale, such as Apple, Samsung, and Huawei, which are better positioned to weather the storm .