Sharp Decline in Global Smartphone Market Triggered by RAM Shortage
The surge in demand for enhanced computing capabilities and expanded data center infrastructure to support artificial intelligence has led to a critical shortage of RAM. This scarcity has caused memory prices to skyrocket, creating significant challenges for smartphone manufacturers worldwide.Industry experts now predict the most considerable annual decline in smartphone shipments seen in over a decade.
Significant Reduction Forecasted in smartphone Shipments
Recent projections indicate that global smartphone shipments will drop from 1.26 billion units in 2025 to roughly 1.12 billion units this year, marking an almost 13% decrease. This downturn is not merely a short-term disruption but signals a fundamental shift reshaping the mobile device industry’s future landscape.
Memory Supply Constraints Reshape Market Dynamics
The ongoing shortage of memory components is expected to trigger more than temporary setbacks; it represents a deep structural change impacting market size, competitive dynamics, and product portfolios. Smaller manufacturers may be forced out as supply tightens and consumer demand weakens due to rising costs.
This transformation will particularly impact entry-level smartphones priced below $100, which risk becoming financially unsustainable amid escalating component expenses. Brands traditionally reliant on affordable devices could face serious profitability challenges moving forward.
Average Selling Prices Climb Amid Rising Component Costs
The average retail price of smartphones is projected to rise approximately 14%, reaching an unprecedented average selling price (ASP) near $523 this year. The primary driver behind this increase is the inflated cost of RAM and other key components.
“The combination of constrained supply chains and higher production expenses will compel many brands either to substantially raise prices or reduce device specifications,” industry analysts emphasize.
Diverse Regional Effects Highlight Market Vulnerabilities
- Middle East & Africa: expected shipment declines surpassing 20% year-over-year due mainly to affordability issues and limited component availability.
- China: Projected decrease around 10.5%, influenced by domestic economic pressures alongside global supply chain disruptions.
- Broad Asia Pacific (excluding japan): Anticipated drop close to 13%, driven by similar cost-related factors affecting consumer purchasing decisions across these markets.
The Road Ahead: When Will Prices Stabilize?
A consensus among market watchers suggests that RAM pricing may begin stabilizing around mid-2027 as manufacturing capacity expands sufficiently to meet growing AI-driven demand along wiht other emerging technology needs. Until then, manufacturers must carefully manage volatile input costs while striving to deliver devices that balance affordability with advanced features.
A Paradigm Shift Away From “More Specs for Less” Strategy
A prominent figure within the smartphone industry recently noted that the conventional approach-offering increasingly powerful hardware at ever-lower prices-is no longer viable under current cost pressures. Companies now face difficult choices: either implement price increases exceeding 30% or scale back hardware capabilities across their product ranges.
“Entry-level and mid-tier segments could shrink by more than one-fifth this year,” a senior executive warned,“placing considerable strain on companies historically dominant within these categories.”
