The global smartphone industry is expected to face a decline in shipments in 2026 according to a research firm called IDC. This drop is mainly because of a shortage of memory chips which’re very important parts in smartphones.

Smartphone shipments could fall to around 1.12 billion units in 2026. This is a decline and one of the steepest ever recorded.

The average selling price of smartphones is expected to rise. This is because manufacturers are passing on rising costs to consumers.

The shortage of memory chips is caused by the expansion of artificial intelligence infrastructure. Big tech companies like Microsoft Google and Amazon are building AI data centers that require huge amounts of memory chips.

These companies are prioritizing supplying memory to these high-profit sectors. This reduces the supply available for smartphones.

As a result smartphone memory supply decreases and prices increase significantly.

One major effect of memory shortages is rising smartphone prices. Smartphone prices could increase significantly with the average selling price reaching around $523.

Some companies have already increased prices. For example Samsung raised prices for its flagship Galaxy S26 models to rising chip costs.

Smartphone shipments are falling because manufacturers cannot produce as phones as before. They cannot get memory chips.

When smartphone prices increase consumers delay upgrading phones and use them longer. This leads to shipments.

Budget smartphones are most affected. The sub-$100 smartphone category may become permanently unsustainable.

Large companies like Apple and Samsung are better positioned to survive. They have financial resources and long-term supply contracts.

This crisis could reduce the number of smartphone companies. Smaller companies may go bankrupt merge with companies or exit the smartphone business.

Android manufacturers are expected to suffer more because many Android brands focus on budget phones and their profit margins are smaller.

Apple, which focuses on premium phones is more protected.

For years smartphones became cheaper and more powerful. This trend may reverse. Manufacturers may reduce RAM upgrades increase prices or remove features.

Consumers may use phones longer. Upgrade every 3-5 years instead of every 2-3 years.

Countries like India rely heavily on budget smartphones. Price increases may reduce adoption.

This could slow growth.

Manufacturers may slow innovation due to cost pressure. Possible changes include delayed product launches, fewer model releases or reduced hardware upgrades.

The smartphone industry affects the technology sector, retail, semiconductor industry and jobs. A slowdown affects the technology ecosystem.

Memory companies benefit from the shortage. Memory prices. Their profits rise.

The technology focus is shifting from consumer devices to AI infrastructure. This changes industry priorities.

Phones may become premium products and budget phones may disappear. Consumers may need to spend more.

The expected decline in smartphone shipments in 2026 marks a major turning point in the technology industry.

The memory shortage caused by AI expansion has disrupted the traditional balance between supply and demand, in the consumer electronics market.

This crisis is forcing smartphone manufacturers to increase prices reduce production and change their strategies.

Consumers will likely face prices and fewer budget options while large companies will strengthen their dominance.

Although the market may recover slowly after 2027 experts believe the era of smartphones may be ending.

The smartphone industry is entering a phase where artificial intelligence, supply chain control and premium devices will shape its future.