Global smartphone shipments will fall by 174 million units in 2026, a 14 per cent drop to 1.08 billion, according to Counterpoint Research cited in the GSMA’s State of Mobile Internet Connectivity 2026 report. It would be the largest single annual decline the industry has ever seen.

The cause is the AI boom. Memory prices more than doubled between late 2025 and early 2026, then jumped another 80 to 90 per cent in the second quarter. Data centers are forecast to consume 70 per cent of all memory chips in 2026, up from 20 to 30 per cent in 2022.

Samsung, SK Hynix and Micron control over 95 per cent of DRAM production. They are shifting capacity to high-bandwidth memory for AI accelerators, starving phone makers of consumer-grade chips.

Budget phones are hit hardest. Memory now makes up almost half the cost of a phone wholesaling under $200. Xiaomi’s Redmi A7 launched at about $110, some 40 per cent more than the A5 a year earlier.

Intel’s CEO says there is no relief until 2028. IDC forecasts a 12.9 per cent decline with average prices rising 14 per cent to a record $523.