Smartphone Shipments Face Record Collapse As AI Data Centres Monopolise Global Memory Chip Supply
The global smartphone market faces a record 13% decline in 2026 due to a severe memory chip shortage. AI infrastructure investments by firms like Meta are exhausting supplies, driving up costs. Experts predict the lowest shipment volumes since 2013, with recovery unlikely until late 2027 as manufacturers prioritise high-end, premium devices.
Mumbai, February 27: The global smartphone industry is bracing for its most significant downturn on record as a worsening memory chip crisis driven by artificial intelligence infrastructure investments continues to deplete inventories. Analysts indicate that the surge in demand from AI hyperscalers has left traditional electronics manufacturers struggling to secure essential components.
According to data from the International Data Corporation, the worsening supply crunch is expected to cause the global smartphone and PC markets to shrink by 13% and 11% respectively. The shift reflects a dramatic reversal from earlier forecasts, as technology giants prioritise AI data centre expansion over consumer hardware. Samsung Smartphone Price Hike: Tech Giant Increases Prices of Galaxy A56, Galaxy A36 and Galaxy F17 in Indian Market.
Impact of AI Infrastructure on Consumer Electronics
Counterpoint Research has projected a 12% year-on-year decline in global smartphone shipments for 2026, marking the sharpest drop ever recorded. Total annual volumes are expected to hit their lowest levels since 2013, as memory companies deprioritise smartphone vendors in favour of high-margin AI segments.
Industry experts note that companies such as Meta and Amazon are rushing to invest in large-scale data complexes, creating a massive strain on rapid access memory (RAM) cards. This reallocation of resources has led to a structural downturn, with the chip shortage surpassing all previous industry expectations.
Rising Costs and Market Consolidation
The scarcity of components is forcing manufacturers to pass increased costs on to consumers, resulting in longer device replacement cycles. Research suggests that original equipment manufacturers will likely focus on mid- to high-end models, as the rising cost of memory makes it nearly impossible to maintain profitability in the entry-level segment.
Larger players with significant scale, such as Apple and Samsung, are expected to withstand the volatility better than smaller competitors. These industry leaders benefit from stronger supply chain integration and higher pricing power, whereas some budget-focused manufacturers may be forced to exit the market entirely.
Outlook for Market Recovery
While the immediate future remains bleak, analysts suggest that the secondary and used smartphone market could see growth as consumers are priced out of new flagship devices. These pre-owned models from premium brands maintain a strong aspirational pull even during periods of economic constraint. Poco X8 Pro, Poco X8 Pro Max India Launch Timeline Leaked; Check Expected Specifications and Features.
Relief for the sector is not anticipated until at least late 2027, contingent on additional memory capacity coming online or an influx of supply from smaller manufacturers in China. Despite the current gloom, experts maintain that the market remains resilient and will eventually stabilise once supply chains rebalance.
(The above story first appeared on LatestLY on Feb 27, 2026 05:37 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).