Smartphone Market Faces Worst Year Ever on AI Memory Shortage; Apple (AAPL) Down 5.2%

The global smartphone market is heading for its steepest annual decline on record in 2026, as an AI-fueled memory shortage drives up costs and curtails shipments, according to IDC. The research firm now expects a 13.9% drop, worse than its February forecast of 12.9%. Memory chip scarcity is forcing manufacturers to raise prices or cancel device configurations, pushing the average selling price to a record $550, up $100 from a year ago. IDC senior research director Nabila Popal said the era of ultra-low-cost smartphones is over, and only brands that adapt to the new cost environment will survive. Rising shipping costs from geopolitical tensions are adding further pressure. Android devices are set to bear the brunt, with shipments projected to fall 20%. Apple (AAPL) is relatively resilient, with a forecast 5.2% decline, improved from an earlier 8.1% estimate. The company recently posted a second straight quarter of 20% iPhone revenue growth, though CEO Tim Cook warned that memory and processor shortages are constraining the supply chain and will impact margins.