Taipei, Taiwan
A world scarcity in memory chips sparked by synthetic intelligence has dealt a “tsunami-like shock” to the smartphone trade, pushing prices to all-time highs, in accordance to a brand new report.
A worsening shortfall of memory elements is anticipated to put cellphone producers out of enterprise and make smartphones costlier than ever this 12 months, 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 units at the IDC, in a Thursday report.
The report estimates that the common promoting value of smartphones will rise 14% this 12 months to an all-time excessive of $523, whereas producers will not give you the option to make telephones that price lower than $100. The IDC additionally predicts that 2026 smartphone gross sales will see a record decline of 12.9% to 1.12 billion items, the lowest degree in additional than a decade.
This explicit semiconductor disaster stems from a increase 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 trade, 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 higher affect on smaller makers utilizing Google’s Android working system, whereas tech giants like Apple and Samsung can 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 have been thought-about 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 government of Nvidia, whose AI chips have made it the most respected firm in the world, has mentioned memory chips are very important to the improvement of AI.
“The amount of memory that’s needed for AI to be useful is increasing quite substantially,” he informed 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 explicit, the older know-how that smartphones and laptops want is referred to as DRAM, or dynamic random-access memory. But these elements are being utilized in one other, extra superior sort of chip that helps information facilities and different applied sciences that require bigger quantities of storage, referred to 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 units or give attention to 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 12 months, and their manufacturing capability is practically booked out. Shares of Taiwanese rivals have additionally surged, with corporations 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 properly into subsequent 12 months. In a January earnings name, Tesla CEO Elon Musk mentioned that restricted provide of memory chips might be one among the largest challenges to future progress, and recommended the firm put money into its personal chip manufacturing amenities to guarantee provide.