AI Servers Stealing Mobile RAM It will make your next smartphone 14% more expensive.
The global smartphone industry is facing a challenging year ahead. According to the latest report from IDC, total smartphone shipments for 2026 are projected to contract by 12.9% year-over-year. This downward trend, which began in November 2025, is primarily driven by a critical global shortage of memory chips (RAM). While a slight recovery is expected in 2027 as supply stabilizes, 2026 will be defined by record-low volumes.
Lowest Volume in a Decade
IDC projects total shipments will fall to 1.12 billion units, the lowest level in over ten years. The impact is unevenly distributed across the market:
The Low-End Crisis: Entry-level devices are the hardest hit. Since RAM accounts for a significant portion of their total manufacturing cost, rising component prices leave manufacturers with two options: absorb the losses or hike prices both of which stifle sales.
Premium Resilience: High-end brands like Apple and Samsung are proving more resilient, as their customers are less price-sensitive and their supply chains often secure priority allocation.
The Rise of the Average Selling Price (ASP)
As cheap components disappear, the industry's pricing structure is shifting. IDC estimates the Average Selling Price (ASP) will surge by 14% to $523 in 2026. This spells disaster for the ultra-budget segment (devices under $100), which currently accounts for 171 million units annually. Experts warn that this segment is becoming "economically unviable" due to soaring production costs.
The main reason for the RAM shortage isn't just that factories can't keep up with production, but that memory chip manufacturers (such as SK Hynix, Micron, and Samsung) are shifting their production capacity to HBM (High Bandwidth Memory) for NVIDIA and Dell's AI servers because it yields significantly higher profit margins than mobile RAM.
By 2026, operating systems like Android 16 and AI features will require at least 8GB-12GB of RAM for smooth operation. This makes it impossible for budget phone brands to "reduce RAM specifications" to compete with higher prices, forcing them to raise prices instead.
With new phones becoming more expensive and cheaper models disappearing from the market, IDC predicts that consumers in emerging markets will increasingly turn to refurbished phones, potentially creating new opportunities for recycling and after-sales services.
Large brands with ample cash reserves are engaging in "panic buying" to ensure they have stock throughout 2026. This situation further exacerbates the limited resources available to smaller brands and could lead to mergers and acquisitions (M&A) among smaller mobile phone manufacturers in the future.
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Source: IDC
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