A rise in the need for computers and data centers to power AI is causing a massive shortage of RAM, driving memory prices sharply higher. Analyst firm IDC predicts that this will lead to a 12.9% decline in smartphone shipments, marking the biggest single-year dip in over a decade. This structural reset of the market is expected to reshape the long-term total addressable market, vendor landscape, and product mix. As a result, the average retail price of smartphones is projected to rise by 14%, with RAM prices expected to stabilize by mid-2027. This trend is likely to impact regions such as the Middle East, Africa, China, and Asia Pacific, with smaller players facing consolidation and the low-end market potentially becoming uneconomical.

In a related warning earlier this year, Nothing co-founder and CEO Carl Pei cautioned that smartphones would cost more in 2026 due to rising memory costs, presenting brands with the choice of raising prices or downgrading specs. As the industry navigates these challenges, it is clear that the unsustainable ‘more specs for less money’ model may give way to higher retail prices and potentially shrinking market segments. This shift could have a significant impact on smartphone manufacturers and consumer demand in the years to come.