Smartphone market set for historic crash as chip prices soar

The global smartphone market is facing a historic slump, with shipments expected to plummet to their lowest levels in over a decade.

According to a report released on Thursday by the International Data Corporation (IDC), device shipments are predicted to drop by 12.9% to just 1.12 billion units.

The primary culprit is a dramatic surge in memory chip prices, driven by tech giants like Meta and Google hoarding supply to build out vast artificial intelligence infrastructures.

This shift has left manufacturers prioritising high-margin data centres over consumer electronics. Consequently, the average price of a handset is expected to jump 14% to a record $523 as companies pass ballooning costs onto shoppers.

Francisco Jeronimo, vice president at IDC, noted: "What we are witnessing is not a temporary squeeze, but a tsunami-like shock originating in the memory supply chain."

While Apple and Samsung may leverage their premium status to gain ground, smaller Android rivals face a brutal fight for survival.

Nabila Popal, senior research director at IDC, warned that the "memory crisis will cause more than a temporary decline; it marks a structural reset of the entire market."

She further cautioned that the sub-$100 phone segment, currently accounting for 171 million devices, will likely become "permanently uneconomical."

Although a modest 2% recovery is anticipated for 2027 as component prices stabilise, experts believe the industry has changed forever.

The days of cheap, high-performance budget handsets may be a thing of the past as the market adapts to this new, costly reality.