AI’s insatiable hunger for memory chips is slamming smartphones with sky-high prices and factory shutdowns, as giants like Nvidia hoard supplies for data centers.
A fresh IDC report paints a grim picture: global smartphone average selling prices will surge 14% this year to a record $523, the highest ever. Budget models under $100? Shipments crater 12.9% to 1.12 billion units in 2026 the lowest in over a decade.
Roots in AI Boom
The crisis traces to AI’s explosive demand. Data centers guzzle DRAM and high-bandwidth memory (HBM) for training massive models.
Nvidia CEO Jensen Huang warned in January:
Memory is very important for the future of AI, as needs skyrocket.
Counterpoint Research reports DRAM and HBM prices doubled in Q1 2026 versus Q4 2025, hitting all-time peaks. Asian powerhouses SK Hynix, Samsung, Micron have pivoted hard.
Similarly, Taiwanese firms like Nanya and Winbond are ramping output, but consumer gadgets starve. Laptop and gaming console makers face similar squeezes, forcing cuts in device memory or a premium-only pivot.
Uneven Pain Hits Android Makers
Big players like Apple and Samsung, with locked-in supply deals, stand to grab market share.
Smaller Android vendors? They’re toast, per IDC’s Nabila Popal:
In short, there is no return to business as usual for vendors and consumers.
Bleak Outlook Ahead
Analysts see shortages dragging into 2027. Elon Musk flagged memory as Tesla’s top growth hurdle in January earnings. Critically, this cements that supply is now very limited.
Together, SK Hynix, Samsung Electronics, and Micron account for more than 90% of the world’s DRAM sales. All are quickly shifting capacity to HBM, which Bloomberg Intelligence predicts will increase from 8% of global DRAM revenue in 2023 to 50% by 2030. Prices stay elevated, sales slump persists smartphone makers must innovate or consolidate, while AI reshapes electronics forever.
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