Global memory shortage drives smartphone shipments to 13-year low as AI boom reshapes chip priorities

The Memory Shortage Is So Bad That Smartphone Shipments Hit a Record Low

Global smartphone shipments fell 11% in the second quarter of this year, marking the lowest level since 2013, according to estimates from Counterpoint Research. To blame are soaring smartphone prices, driven incrementally higher as a global memory chip shortage worsens. "The global memory crisis has now overtaken every other factor as the single biggest drag on the smartphone industry," Counterpoint Research senior analyst Shilpi Jain said in the release. The AI boom and the unprecedented data center buildout have skyrocketed demand for high-bandwidth memory chips. With the trillions of dollars flowing into scaling AI globally, the top chipmakers have shifted their focus almost entirely to address the AI industry's chip demand, albeit at the expense of consumer electronics manufacturers. With finite chipmaking capacity, consumer-level memory supply has dragged, causing delays and price hikes that have been undeniably passed on to consumers looking to buy gadgets that also rely on these memory chips, such as computers and smartphones. But the impact is not dealt equally. Demand for smartphones from Samsung and Apple in the second quarter was still pretty resilient, Counterpoint claims, with both phonemakers experiencing growth. Driven by the flagship Galaxy S26 series and fewer price hikes than some competitors, Samsung experienced the strongest growth in shipments. Meanwhile, Apple's market share rose to a record 20%, probably thanks to its position as the only major smartphone manufacturer that has largely avoided price hikes. But that reality is looking likely to change with the upcoming iPhone 18, which recent reports claim could be priced at least $200 higher than the iPhone 17 Pro. Apple CEO Tim Cook also told the Wall Street Journal last month that the memory chip shortage had become "unsustainable," making price hikes for Apple products simply "unavoidable." "This is a hundred-year flood," Cook told the WSJ. "I've never seen anything like it in any area in over 40 years." Instead of Samsung and Apple, the brunt of the decline in shipments was faced by smartphone makers that appeal to a more budget-conscious consumer, such as China's Xiaomi and Oppo. Entry and mid-tier smartphones, which are priced considerably lower than the iPhone, experienced major price hikes because production became "structurally unfeasible at previous price points," Jain said. Analysts foresee the memory crisis continuing into next year and beyond, with some experts even seeing the shortage and the accompanying price hikes bleeding into the next decade. Top memory chipmaker SK Hynix's CEO Kwak Noh-Jung told Reuters last week that he expects 2027 to be the worst year yet for the memory shortage. "We forecast that next year will be the worst year in the industry's history from the supply perspective," Kwak told Reuters. "We still forecast that customer demand will remain higher than our supply capacity even beyond 2030." The Counterpoint report's view is also pessimistic. As the shortage continues into next year, the researchers expect shipments to be down around 14% for the full year 2026. "Overall demand recovery is unlikely until memory supply conditions improve substantially," the company said. If AI hype and soaring financial commitments continue as is, that improvement in conditions is unlikely to happen any time soon.

The smartphone market just hit its worst slump in 13 years, and your next phone will cost more

Sara Heritage is a tech and gaming journalist, who's currently making her way up to Master Ball rank in Pokemon Champions. Bylines in IGN, GAMINGbible, The Gamer and more. You can usually find her tinkering with tech, or restoring old consoles, always with one of her 3 cats nearby. Come and talk with her over on Twitter @SHeritageJourno. * Smartphone shipments fell 11% in Q2 2026, the steepest slump since 2013. * AI-driven memory demand raised DRAM/NAND prices, hitting budget phones and raising entry-level costs over 50%. * Apple and Samsung gained share; buy refurbished for deals, but check battery, factory reset and warranty. The smartphone market just hit its biggest slump in over ten years, according to Semafor. Shipments dropped 11% in Q2 2026, the lowest since 2013. It's not just people buying fewer phones -- there's a global memory shortage making things worse. Ultimately, it means that next year you might have to pay more for an entry-level phone, for far less power. So, what's causing all this? It's mainly thanks to AI Memory makers like Samsung and Micron are now focused on producing high-end chips for AI data centres rather than standard phone parts. AI chips make more money, so memory suppliers are giving phones the cold shoulder. Prices for DRAM and NAND flash (the stuff inside every phone) have shot up. For cheaper phones, memory can account for up to 60%% of the cost, so when prices rise, these phones either get more expensive or just aren't worth making. Entry-level phones now cost over 50% more than they did last year, so many people are priced out. PC builders aren't happy either -- memory kits that were $100 are now closer to $350, and good luck finding them in stock. This hit budget phone makers like Xiaxomi and OPPO the hardest. Their shipments dropped fast because they had to raise prices. Meanwhile, Apple and Samsung are doing just fine. They actually grew their sales or grabbed more market share, even with the slump. Apple kept prices steady while everyone else had to raise theirs. The iPhone 17 did great, and Apple grabbed a record 20% of the global market. Samsung, still on top with 24% market share, used its supply chain smarts to keep products on shelves, even when cheaper phones weren't selling. Samsung Galaxy S26 $780 $853.76 Save $73.76 SoC Snapdragon 8 Elite Gen 5 Display 6.3-inch Dynamic AMOLED 2x RAM 12 GB Storage 256 or 512 GB $780 at Walmart Expand Collapse For the average user, it means one thing: cheap, powerful phones are on pause for now. As long as AI keeps hogging all the memory, phone makers will focus on pricey models. If you want a deal, you might have to go refurbished or second market. If you do, make sure to check the battery health and ask if the phone has been factory reset. Look for sellers offering a warranty or return window, and avoid devices with signs of water damage or a locked bootloader. Buying from reputable shops or platforms with buyer protection can make a big difference, and always compare prices to new models to make sure you are getting a real deal.