Cheap smartphones may disappear as memory chip shortage drives global price surge

The global smartphone market is projected to contract 12.9% this year, with shipments falling to around 1.1 billion units from 1.26 billion the previous year, reversing several years of gradual growth, Bloomberg reported citing a recent report from research firm IDC.

IDC said the decline is driven by an unprecedented shortage of memory chips as demand for advanced memory used in AI computing continues to drain global supply.

"The tariffs and pandemic crisis seem a joke compared to this," IDC Senior Research Director Nabila Popal, said.

Smarphones from different brands. Photo from Pexels

The rising cost of memory components is forcing smartphone manufacturers to adjust strategies by reducing specifications, eliminating unprofitable entry-level models and steering consumers toward higher-end devices.

Low-cost devices are expected to be the most affected. Around 170 million smartphones priced below $100 were shipped globally last year, but IDC said that segment is becoming uneconomical for manufacturers to maintain.

"The days of cheap smartphones are gone, as even when the crisis is over, we don’t expect memory prices to go back down to 2025 levels," Popal said.

IDC expects the memory shortage to extend into 2027, and said that even after supply recovers, the industry may not return to previous pricing structures.