The smartphone market is on track for its worst year yet

The global smartphone market is set for its worst year on record in 2026, with shipments expected to fall by 13.9%, according to International Data Corporation (IDC). This revision, down from a previously projected 12.9% decline, reflects ongoing challenges from an AI-driven memory shortage that has disrupted chip supply, increased costs, and forced vendors to cut shipments or raise prices. The memory crunch has pushed smartphone average selling prices to a record $550, up $100 from last year, as companies focus on higher-end models. IDC senior research director Nabila Popal warned that 2026 will mark a shift to structurally higher costs, ending the era of ultra-cheap smartphones. Vendors must adapt to sustain demand at elevated price points, while consumers face limited affordable options. The Android market will be hardest hit, with shipments projected to drop 20% year-over-year. Samsung is expected to gain market share due to its midrange and premium lineup, while smaller competitors struggle. Apple, though not immune, is forecast to see a smaller decline of 5.2%, an improvement from an earlier estimate of 8.1%, thanks to strong iPhone 17 sales and recovery in China. CEO Tim Cook acknowledged supply constraints, including memory shortages and processor shortages, which will impact Apple’s margins. Despite the challenges, Apple reported 20% iPhone revenue growth in consecutive quarters. The broader industry faces a defining year as cost pressures reshape production strategies and consumer expectations.