How AI is driving a global smartphone memory shortage

The rapid mainstream adoption of Artificial Intelligence has driven the demand for memory to unprecedented levels, fueling a shortage that is beginning to hit the smartphone market. The International Data Corporation released a report in December 2025, stating that the high demand for memory due to the explosive growth of AI infrastructure would divert memory resources away from consumer electronics.

Now, IDC’s Worldwide Quarterly Mobile Phone Tracker has predicted a massive smartphone market slowdown with shipments projected to fall 12.9% year-on-year in 2026. Memory suppliers have reportedly shifted priority from producing DRAM and NAND used in smartphones, PCs, and other consumer electronics to producing high-bandwidth and high-capacity DDR5 used in AI data centers.

Big names in the memory industry – Samsung Electronics, SK Hynix, and Micron Technology have been pressed into action to produce HBM for AI. The reallocation of manufacturing resources has resulted in a DRAM and NAND/SSD shortage, pushing prices sharply higher in recent months.

Newsweek Tech reported the potential smartphone supply disruption this year and how it could impact small business players, while smartphone giants Apple and Samsung are expected to expand their market share. Speaking on the challenge, Francisco Jeronimo, vice president for Worldwide Client Devices, IDC, said:

“What we are witnessing is not a temporary squeeze, but a tsunami-like shock originating in the memory supply chain, with ripple effects spreading across the entire consumer electronics industry.”

“The global smartphone market, particularly Android manufacturers, faces a significant threat. Vendors whose business is mainly at the low end of the market are likely to suffer the most. Rising component costs will hit their margins, and they will have no choice but to pass the costs on to end users.”

He added:

“By contrast, Apple and Samsung are better positioned to navigate this crisis. As smaller and low-end-positioned Android vendors struggle with rising costs, Apple and Samsung could not only weather the storm but potentially expand market share as the competitive landscape tightens.”

Nabila Popal, senior research director with IDC’s Worldwide Quarterly Mobile Phone Tracker, describes the effects of the memory crisis as a “structural reset.” She said:

“The memory crisis will cause more than a temporary decline; it marks a structural reset of the entire market, fundamentally reshaping long‑term TAM (Total Addressable Market), the vendor landscape, and the product mix.

“We expect consolidation as smaller players exit, and low-end vendors face sharp shipment declines amid supply constraints and lower demand at higher price points.”

Popal adds that skyrocketing memory prices could eliminate the “sub-$100 segment,” and that stability could be witnessed only in mid-2027. She said:

“Although shipments will witness a record drop, Smartphone ASP is projected to rise 14% to a record $523 this year. While memory prices are projected to stabilize by mid-2027, they are unlikely to return to previous level — making the sub-$100 segment (171 million devices) permanently uneconomical. In short, there is no return to business as usual for vendors and consumers.”