Before a crisis was declared, the numbers were already dismal. Since the third quarter of 2017, when the market peaked at about 1.55 billion units annually, global smartphone sales have been declining. That amount dropped to 1.26 billion by 2025, an 18% decrease over almost ten years that was so gradual that many in the sector chose not to think about it.
It was largely influenced by the market for used phones. Nowadays, refurbished devices are typically 30% less expensive than new models, and the majority continue to get software updates. Simply put, people no longer felt compelled to purchase new items. Then, in 2026, the numbers took a turn for the worse than anyone could have predicted.
| Category | Details |
|---|---|
| Topic | Global Smartphone Supply Crisis (2026) |
| Primary Cause | Memory chip shortage driven by AI data center demand |
| Secondary Cause | Strait of Hormuz crisis disrupting helium supply |
| Forecast Source | IDC (International Data Corporation), Gartner |
| Projected 2026 Decline | 12.9% drop in global smartphone shipments |
| Projected Shipments (2026) | ~1.12 billion units worldwide |
| Average Selling Price Increase | +14% YoY, reaching a record $523 |
| RAM Price Surge | 16GB DDR4 RAM up +2,352% YoY to $76.90 |
| Hardest Hit Region | Middle East & Africa (-20.6% YoY) |
| Recovery Outlook | Moderate recovery in 2027; fuller recovery not before 2028 |
| Key Players Affected | Xiaomi, smaller Android vendors; Apple & Samsung relatively insulated |
| Helium Supply Risk | QatarEnergy supplies 34% of global helium; output halted since March 4 |
| Reference Website | IDC Global Smartphone Forecast |
IDC now predicts a 12.9% decline in smartphone shipments this year, which would return global sales to 2014 levels. In just one year, more than ten years of market expansion were essentially erased. When IDC analyst Nabila Popal referred to it as a tsunami rather than a bump or a correction, she didn’t mince words. A wave. It’s usually worth listening to when someone with that title uses that word.
Memory chips are the driving force behind the collapse. Simply put, the three leading manufacturers—Samsung, SK Hynix, and Micron—cannot simultaneously satisfy demand from two sources. Five years ago, the rate at which AI data centers are using memory would have seemed unimaginable. At $76.90, the average spot price for 16GB DDR4 RAM has increased by over 2,300% annually. Not far behind, eight-gigabyte chips have increased by almost 1,900%. These are not rounding mistakes. These are the kinds of numbers that cause industries to change.
The backstory is one of those cycles of boom and bust that the semiconductor industry appears to be constitutionally unable to escape. Cloud giants hoarded memory during the pandemic to accommodate a surge in remote work that everyone believed would last forever. When it wasn’t, producers reduced output by up to 50% and demand dried up. Then AI showed up, and it was ravenous.
The Big Three were hesitant to increase capacity once more because they were still recovering from being severely burned on excess inventory. It takes at least 18 months and up to $15 billion to build a new fabrication plant. The industry’s reluctance in 2024 and early 2025 is now the market’s entire issue, and there is no easy solution.
The president of Xiaomi stated last week that prices are increasing at a rate “beyond imagination”—a statement that seems almost too informal for what he was truly describing. He has predicted large losses and complete closures for smaller vendors. This could be more of an early draft obituary than a warning for many low-cost smartphone brands.
The picture is not merely economically inconvenient; rather, it is truly concerning because the effects won’t be distributed equally. The most vulnerable markets are those where low-end Android phones predominate. A 20.6% year-over-year decrease is anticipated in the Middle East and Africa.
The biggest smartphone market in the world, China, is predicted to decline by 10.5%. These figures represent hundreds of millions of people for whom a $150 Android phone is the only choice and not a compromise.
A significant portion of that population is essentially being priced out of the new device market entirely, with average selling prices expected to reach a record $523. According to Gartner, a lot of consumers are likely to switch to refurbished phones or just keep their existing devices longer. According to the same analysis, the sub-$500 entry-level PC market might completely disappear by 2028.
Perhaps because it sounds abstract until you understand what it means, there is another crisis going on concurrently that has gotten far less attention. A crucial component in the production of semiconductors is helium. About 34% of the world’s helium comes from Qatar through QatarEnergy. Due to the closure of the Strait of Hormuz, QatarEnergy declared force majeure on its LNG output on March 4.
On March 18 and 19, missiles hit two of its processing trains. According to the company, repairing the damage could take up to five years and cost about $20 billion a year. Since the start of the crisis, helium prices have doubled, and supplies are already being rationed; hospitals that need helium for MRI machines are given priority, which illustrates how severe the restrictions are.
As this develops, it’s difficult to ignore a certain dark irony: a family in Lagos or Karachi might not be able to afford a new phone in 2026 because of the same AI revolution that is being hailed for its sophistication and promise. The chips that would otherwise be used in low-cost phones are being hoarded by the data centers that supply the large language models. It’s not malevolent. It’s just supply and demand, and it’s happening with especially harsh accuracy.
After this time, Apple and Samsung are probably going to be in a better relative position. In ways that smaller Android vendors just cannot, both have the size and financial stability to absorb growing costs. As a manufacturer of devices and a significant memory supplier, Samsung is in a unique position where it both suffers from the shortage and gains from the prices it raises.
Consolidation appears to be almost unavoidable. When component costs increase at this rate, smaller players who built their businesses on thin margins and high volume will find that combination unsustainable.
When the recovery occurs, it will happen gradually. IDC anticipates a slight 1.9% increase in shipments in 2027; as memory supply conditions improve, a more significant improvement is expected in 2028. The market is not anticipated to reach 2025 levels even by 2030.
The market has simply changed into a permanently smaller shape due to AI’s appetite and the long-lasting effects of the pandemic‘s supply chain decisions, but it’s still unclear if that is a transient shock making its way through the system or something more structural. As of right now, the market for smartphones is acting like canaries. It’s transmitting a signal. Whether anyone downstream is paying attention is the question.
