Smartphone shipments drop as memory and tariffs squeeze consumer tech

The impacts of the ongoing memory shortage continue to materialize as consumer electronics buyers have struggled to secure supply and AI customers and hyperscalers win long-term contracts. Now, IDC expects worldwide smartphone shipments to decline a record 16.7% in 2026 as memory prices force manufacturers to rethink product portfolios. Many smartphone ASPs are forecast to climb 27.6% to $581, with lower-cost Android devices facing particularly significant pressure.

Furthermore, a new round of tariffs could introduce another layer of pressure. The Trump administration is reportedly considering semiconductor tariffs that could extend beyond individual chips to the finished products containing them, including laptops and gaming consoles.

Memory crisis drives record smartphone shipment decline

With memory hard to come by and consumers keeping their wallets closed, IDC forecasts a 16.7% drop in worldwide smartphone shipments in 2026. After smashing IDC’s projected decline of 14% offered just a quarter ago, the latest outlook paints a grim picture and confirms the smartphone market’s downward sales trajectory.  

It also suggests the memory shortage is hitting harder than analysts expected even a few months ago, leaving vendors with less room to adjust portfolios or pricing before shipments decline.  

The driving force behind this drop should surprise no one. DRAM and NAND costs have risen more than 300% year-over-year, and device makers have largely exhausted their ability to absorb the shock. As costs are passed on to consumers who are already being asked to pay more for just about everything, the result is fewer smartphones being sold.  

However, even as unit shipments plummet, IDC projects the total smartphone market value is still poised to grow in 2026. It forecasts a 6.3% climb to $613 billion by year’s end, largely due to the same price increases forcing shipments down.  

Average selling prices are expected to rise significantly to a new mark of $581, effectively resetting what a smartphone costs at every tier. Today, the average smartphone costs nearly $150 more than it did just a few years ago. The sub-$100 segment, which accounted for a substantial share of global volume as recently as last year, is the biggest casualty.  

Vendors competing in the budget Android price category were already operating on thin margins, and most simply can’t compete if memory costs remain as high as they are today. As a result, Android shipments are expected to decline 24.3%. Rather than selling at a loss or exiting the market, many of these manufacturers are expected to move upmarket and focus on mid-tier devices.  

Notably, the one category still seeing shipment growth is foldables. IDC projects 12.6% growth for the segment in 2026, largely thanks to Apple debuting its first foldable model later this year.

For OEMs and component buyers in every sector, navigating the ongoing memory shortage is increasingly becoming a question of how long portfolios must be adjusted around a higher cost floor. Teams monitoring DRAM and NAND pricing in real time while maintaining visibility into where allocation is easing across the global supplier base are better positioned to identify windows of opportunity before their competitors.  

Sourceability can help customers monitor market movements, locate global inventory, and evaluate alternative sourcing opportunities to develop more resilient supply chains amid volatility.  

Semiconductor tariffs threaten another wave of cost increases

According to a group of White House insiders who spoke to Politico, the Trump administration is reportedly weighing an expansion of its chip tariffs. The options being considered could extend duties beyond individual chips to cover the finished products built with them, including laptops, gaming consoles, and data center servers.  

Commerce Secretary Howard Lutnick, who controls the final decision per Politico’s sources, reportedly favors a model that ties tariff relief to domestic manufacturing commitments. This would allow companies to import a set volume of chips duty-free based on how much semiconductor production they pledge to bring to the U.S.  

Another proposal being considered would set country-specific tariff rates and import quotas, with distinct guidance for major manufacturers in each nation. As of now, it’s unclear what the final rate structure may look like.  

Earlier this year, the Trump administration’s chip tariffs carried broad exemptions for finished products, making them less painful for data center operators and some manufacturers who sell their products domestically. The newest round of tariffs being considered will reportedly eliminate or significantly tighten those exemptions. Given the global nature of today’s technology manufacturing sector, this poses a problem.  

Chips fabricated domestically, including those from TSMC’s flagship Arizona fab, often still travel to assembly facilities in Asia to be integrated into laptops, servers, or other finished products before re-entering the U.S. market. Regardless of where the internal chips originated, those finished products could be subject to duties, leaving both OEMs and customers with little recourse as domestic chip production can only account for a fraction of demand.  

PCs are especially exposed to the potential new structure. Average prices are already up more than 20% in the first half of 2026 thanks to elevated memory and production costs. Added tariffs would likely be passed through to buyers who have already shown hesitancy to upgrade devices at these higher prices.  

Given their high value, AI servers may feel less of an impact or be granted some form of relief. However, broader semiconductor tariffs do complicate U.S. data center expansion as customers face higher costs and may struggle to obtain tariff-free chip allocations from domestic manufacturers. Despite American tech firms showing willingness to dump billions of dollars into data center expansions, new tariffs could cause them to rethink their timelines.  

With AI projecting an outsized influence across the semiconductor industry and buyers absorbing higher prices, new tariffs would likely amplify the divergence between consumer- and enterprise-grade chips. Laying additional cost onto categories already strained by memory inflation and price sensitive consumers carries massive ramifications for chip buyers of all sizes.

Mitigating the effects of disruption starts with a proactive approach. Supplier diversification and real-time visibility into pricing and allocation trends are two strategies that help companies adapt in an ever-shifting market. As prices rise and geopolitical decision-making sends ripples through the chip industry, Sourceability helps customers evaluate global supply options and build procurement strategies that account for all types of disruption.