AI-Driven Memory Costs Could Trigger Smartphone Market’s Biggest-Ever Decline in 2026
Generative AI data centers are buying large volumes of high-bandwidth memory (HBM), prompting chipmakers to prioritize production capacity and squeezing supplies of memory used in smartphones. Rising component prices are eroding handset makers’ margins and pose a particular threat to the cost-sensitive budget segment, especially devices priced below $100.
International Data Corporation (IDC) forecasts that global smartphone shipments will fall 13% year on year in 2026, potentially marking the steepest decline in the market’s history. Budget-focused brands including OPPO, vivo and Xiaomi are already under pressure to raise prices. If memory costs continue to climb, sub-$100 models could gradually disappear from the market during 2026.
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The history behind this eventAI Boom Drives Up Memory Prices, Threatening 200 Million Device Shipments
Demand for high-performance semiconductors has risen sharply as major companies including Microsoft and Google have expanded AI data centers aggressively since 2024. Chipmakers such as Samsung and SK hynix have prioritized capacity for high-bandwidth memory, causing severe shortages and soaring prices for general-purpose memory. The resulting capacity squeeze has significantly increased hardware costs and is spreading to end markets for smartphones, laptops and other consumer electronics worldwide.
TechNews reported on July 14, 2026, that general-purpose memory prices had surged sixfold as investment in AI infrastructure was projected to exceed $700 billion. The chip-driven inflation has forced brands including Apple and Microsoft to raise smartphone and computer prices, sharply reducing consumers’ willingness to replace their devices. Research firms including IDC forecast that global shipments of smartphones, computers and other electronic devices will fall by about 200 million units in 2026 as a result.
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