Memory crisis to hit smartphones hard in 2026; budget buyers may feel the pinch

If you’re planning to buy a new smartphone, 2026 may not be the year to do it.

The global smartphone market is heading toward one of its sharpest slowdowns in recent years, as a deepening memory chip shortage threatens to make devices significantly more expensive, particularly in price-sensitive markets like India.

According to the International Data Corporation (IDC), global smartphone shipments are expected to drop 12.9% to 1.12 billion units in 2026, down from 1.26 billion devices in 2025. The projected decline is being driven largely by surging memory chip prices, which are already pushing up retail costs across brands.

“The memory crisis will cause more than a temporary decline; it marks a structural reset of the entire market,” said Nabila Popal, senior research director at IDC's Mobile Phone Tracker.

Sub-$100 phones may disappear

For India, where budget smartphones dominate volumes, the impact could be significant.

Popal warned that the sub-$100 smartphone segment may become “permanently uneconomical.” IDC estimates that the average retail price of a smartphone is expected to rise by 14% in 2026.

That would directly affect entry-level and budget buyers, who form the backbone of India’s smartphone market. The affordability that helped drive mass adoption over the past decade could face renewed pressure.

Price hikes have already begun

The impact of rising memory prices is no longer theoretical. Several brands have already increased prices on popular models in recent months.

Devices such as the iQOO Z10 and Vivo T4 5G have reportedly seen price hikes of around Rs 2,000. The iQOO Z10x and Vivo T4x 5G have experienced increases ranging between Rs 1,500 and Rs 2,500, depending on storage variants.

Premium models are not immune either. Samsung’s latest Galaxy S26 series launched with price hikes of up to Rs 10,000, with the standard variant seeing a Rs 6,000 increase and the Ultra model going up by Rs 10,000 compared to previous pricing benchmarks.

AI infrastructure squeezes supply

The shortage is being linked directly to the global artificial intelligence boom.

According to IDC, major technology companies including Meta, Google and Microsoft are aggressively stockpiling memory chips to power AI data centres and large-scale compute infrastructure. That surge in enterprise demand is tightening supply for consumer electronics manufacturers.

“What we are witnessing is not a temporary squeeze, but a tsunami-like shock originating in the memory supply chain,” said Francisco Jeronimo, vice president for Worldwide Client Devices at IDC.

With hyperscalers capturing a significant portion of global memory output, smartphones and PCs are left competing for the remaining supply, often at higher component costs.

A structural reset

The emerging dynamic suggests this is not just another cyclical downturn but a broader realignment of the technology supply chain, where AI infrastructure is beginning to take priority over consumer devices.

For Indian buyers, that could mean fewer ultra-budget options, higher average selling prices and longer upgrade cycles.