Taipei, Taiwan
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A worldwide scarcity in memory chips sparked by synthetic intelligence has dealt a “tsunami-like shock” to the smartphone business, pushing prices to all-time highs, in accordance to a brand new report.
A worsening shortfall of memory parts is anticipated to put telephone producers out of enterprise and make smartphones dearer than ever this yr, in accordance to the paper by the International Data Corporation, a Boston-based know-how evaluation agency.
“What we are witnessing is not a temporary squeeze, but a tsunami-like shock originating in the memory supply chain, with ripple effects spreading across the entire consumer electronics industry,” mentioned Francisco Jeronimo, who leads analysis on cell gadgets at the IDC, in a Thursday report.
The report estimates that the common promoting worth of smartphones will rise 14% this yr to an all-time excessive of $523, whereas producers will not have the option to make telephones that value lower than $100. The IDC additionally predicts that 2026 smartphone gross sales will see a record decline of 12.9% to 1.12 billion models, the lowest stage in additional than a decade.
This specific semiconductor disaster stems from a growth in synthetic intelligence, and the subsequent rush to construct information facilities that rely closely on memory chips. As demand has skyrocketed, the world’s largest memory chip producers in Asia have pivoted to supplying the AI business, leaving little left for shopper electronics like laptops, gaming consoles and telephones.
The IDC mentioned it expects the scarcity to completely have an effect on smartphone producers, and have a better impression on smaller makers utilizing Google’s Android working system, whereas tech giants like Apple and Samsung could be insulated from the ache and would have the alternative to enhance market share.
“In short, there is no return to business as usual for vendors and consumers,” mentioned Nabila Popal, senior analysis director at the IDC, in the identical report.
For years, memory chips had been thought of a modest however regular enterprise, with a lot thinner revenue margins than cutting-edge chips utilized in laptop processing.
The rising demand from AI has modified that.
Jensen Huang, chief govt of Nvidia, whose AI chips have made it the most respected firm in the world, has mentioned memory chips are important to the growth of AI.
“The amount of memory that’s needed for AI to be useful is increasing quite substantially,” he instructed reporters in Taiwan in late January. “Memory is very important for the future of AI.”
As AI improves, it requires bigger quantities of each processing energy and memory storage. In specific, the older know-how that smartphones and laptops want is known as DRAM, or dynamic random-access memory. But these parts are being utilized in one other, extra superior form of chip that helps information facilities and different applied sciences that require bigger quantities of storage, known as HBM, or excessive bandwidth memory.
Now prices for each DRAM and HBM chips have hit record highs, practically doubling in the first quarter of 2026 in contrast with the earlier quarter, in accordance to know-how analysis agency Counterpoint Research. That’s forcing electronics producers to minimize down on memory of their gadgets or deal with making premium merchandise.
Stock prices of the world’s prime three suppliers of memory chips – SK Hynix, Samsung and Micron – hit all-time highs this yr, and their manufacturing capability is practically booked out. Shares of Taiwanese rivals have additionally surged, with firms like Nanya Technology Corporation, Winbond Electronics Corporation and Powerchip Semiconductor Manufacturing Corporation (PSMC) all pledging to enhance manufacturing.
Analysts and tech executives have warned that the memory scarcity will persist effectively into subsequent yr. In a January earnings name, Tesla CEO Elon Musk mentioned that restricted provide of memory chips may very well be one in every of the largest challenges to future progress, and urged the firm spend money on its personal chip manufacturing amenities to guarantee provide.