Smartphone Shipments Just Hit a New Low. Thanks, RAMageddon

In the third quarter of 2026, smartphone shipments worldwide reached their lowest point since 2012, dropping by 20%, according to Counterpoint Research. The decline is attributed to a memory shortage, known as "RAMageddon," which has driven up the cost of DRAM and NAND chips, the primary memory components used in smartphones, computers, and data centers.

These memory price hikes have forced manufacturers to raise phone prices by an overall 20% in 2026. The shortage of memory chips is largely due to the massive AI infrastructure buildup, which demands a significant amount of chips.

According to senior analyst Shilpi Jain at Counterpoint, the memory crisis has affected the second consecutive quarter, as memory costs more due to its scarcity. Research firm Gartner estimates that companies will spend $1.4 trillion on AI infrastructure this year and $2.6 trillion overall. Over 70% of global memory chip production will be allocated to AI investment, as reported by TrendForce.

While some manufacturers, such as Samsung and Apple, fared well during the quarter, both saw a year-over-year decline in shipments. Samsung's market share rose to 23%, up from 19% in 2025, driven by strong initial demand for the Galaxy Fold 8. Apple's share increased to 22%, the first time it surpassed 20% in the three-month period. However, both companies experienced a decrease in sales compared to the previous year.

The current smartphone market is also facing challenges from rising inflation for most products and services, which may suppress phone sales. Both Samsung and Apple raised prices for their latest models, with Samsung increasing the price of the Galaxy S26 by $100 and Apple's new iPhone 18 Pro and Pro Max launching $100 above the previous generation.

The recent introduction of various smartphone models, including Samsung's Galaxy Z Fold 8 and Galaxy Z Flip 8, Google Pixel 11, and Apple's iPhone 18 Pro line and foldable iPhone Duo, has not been enough to boost sales.

With prices on the rise, customers are becoming more cautious about purchasing the latest smartphones, as they prioritize devices that offer robust, reliable connectivity. A recent survey by Counterpoint Research found that half of the respondents across the US, UK, India, China, and Germany would wait for holiday sales to buy a new phone.

This percentage rises to 56% among Gen Z consumers. The survey also suggests that consumers are increasingly opting for refurbished devices and prioritizing higher-value devices, leading to a potential increase in purchases of refurbished handsets, repairs, and trade-in schemes.

In response to the declining sales, phone manufacturers might resort to different strategies, such as offering refurbished handsets, enhancing repair services, and implementing trade-in schemes. Cellphone carriers, including T-Mobile, Verizon Wireless, and AT&T, could also entice customers with financing plans and bundled services. As AI investment continues to consume memory supply, phone prices are unlikely to decrease anytime soon, potentially leaving customers with fewer budget alternatives.