Smartphone shipments plummet as memory crisis pumps up prices

Smartphone shipments fell by at least a fifth in the third calendar quarter as the AI-driven memory crunch battered another consumer hardware market. Preliminary estimates from IDC and Omdia put the year-on-year decline at 22 percent and 20 percent respectively. Memory costs have surged by approximately 350 percent since last year, according to IDC, and are still rising. This continues to place substantial pressure on vendor margins, prompting them to hike price tags and scale back on devices at the value end of the market. IDC estimates that vendors shipped 255.3 million smartphones into distribution channels and warns that the downturn is far from over. "The sharp downturn the industry has been bracing for finally materialized in the third quarter this year. However, the worst is yet to come," said Nabila Popal, IDC's senior research director for worldwide devices. "Current indicators suggest that the market has not yet reached the bottom. While memory inflation is beginning to slow down, with a low double-digit sequential increase in Q3 compared to a 50 to 100 percent jump in prior quarters, costs remain elevated across other critical components as well, compounding the crunch." Omdia puts shipments at roughly 255 million, close to IDC's estimate despite the different annual decline. It says that the shrinking market has further polarized the competitive landscape, with Samsung and Apple now accounting for about 45 percent of global shipments, up approximately 8 percentage points from a year ago, while rising costs hit more price-sensitive segments particularly hard. Omdia still expects global smartphone shipments to fall 12 percent across 2026, followed by another 6 percent decline next year. It previously forecast that devices priced above $400 would prove more resilient and could record shipment growth. "We don't anticipate any relief to the current memory crisis before 2028 at the earliest as we expect there to remain a considerable gap between demand and supply. The first signs of improvement we're looking for is when the memory pricing will stabilize (basically stopping to grow), and we're still not there yet," Omdia principal analyst Runar Bjorhovde told The Register. Omdia says investment in distribution partnerships and premium devices could determine which vendors emerge stronger when costs ease. New flagship launches, promotions, and festive demand in Q4 are unlikely to fully offset persistent supply-side pressures. Omdia reckons buyers may get used to paying more, potentially creating greater opportunities for higher-value devices. The firm previously outlined the measures some phone makers are taking to offset the rising cost of memory parts, including switching to cheaper display panels, sensors, or radio frequency (RF) modules. IDC also sees little prospect of recovery before 2028 and expects a lasting shift toward higher costs. It says vendors that adapt their products and pricing will be best placed to gain market share. ®