The smartphone crisis is coming.

Experts predict that the smartphone industry is about to face an unprecedented crisis.

The smartphone market is facing its most serious crisis since the COVID-19 pandemic. Photo: Phone Arena .

The global smartphone market in 2026 will witness a major shock as shipments are expected to decrease by nearly 13%, equivalent to approximately 160 million devices disappearing from store shelves. This is not due to a drop in consumer demand, but rather to a severe disruption in the memory chip supply chain driven by the prioritization of AI.

The shift of resources to data centers has caused the cost of electronic components to skyrocket, directly pushing phone prices to record highs. This not only makes things difficult for consumers but also threatens the existence of the affordable phone segment worldwide .

Supply chain crisis

The root cause of the current crisis stems from the absolute prioritization of artificial intelligence by semiconductor manufacturers.

Chip giants like Samsung and SK Hynix are focusing all their efforts on producing high-bandwidth memory (HBM) chips to supply AI servers and massive data centers. This focus on the highly profitable business segment has inadvertently neglected the traditional consumer market.

According to analysts, the mobile market is about to face its most severe crisis in decades. The latest report from market research firm IDC forecasts that smartphone shipments in 2026 will only reach 1.1 billion units, a drop of approximately 160 million units (equivalent to a 13% decrease) compared to 2025.

Approximately 160 million smartphones could disappear from store shelves. Photo: Bloomberg.

If these predictions come true, this would be the worst downturn in the last 10 years, even more severe than the recession caused by the Covid-19 pandemic. Historically, over the past two decades, the smartphone market has never witnessed such a serious downturn.

This situation is not just a temporary shortage, but a structural shift across the entire industry. The willingness of large tech corporations to pay exorbitant prices for AI chips has put smartphone manufacturers at a disadvantage. Without intervention or adjustments to production, the mobile industry will continue to be drained of resources by the ongoing global demand for AI.

Mid-range phones face difficulties, while cheap phones are becoming extinct.

The most direct and painful consequence of this crisis is the increase in the average selling price (ASP) of devices. The average smartphone price is expected to rise by approximately 14%, reaching an all-time high of $523 .

Typically, flagship models like the newly released Samsung Galaxy S26 have had to increase in price by at least $100 to cover component costs, even though the feature upgrades don't really justify the extra money.

More worryingly, analysts are warning of the "extinction" of the low-cost phone segment (around $100 ). Despite achieving impressive production figures of 170 million units shipped in 2025, the skyrocketing price of memory chips has resulted in negative profit margins for this segment. This makes continued production an unfeasible economic proposition.

The mid-range and budget smartphone segments will be most heavily impacted. Photo: Techradar.

"The era of cheap smartphones is over," asserted Nabila Popal, Senior Research Director at IDC. According to her, even if the market recovers, memory chip prices will establish a new floor, significantly higher than they were in 2025.

Many Chinese Android brands, which relied on sales in the budget segment to gain market share, are facing the risk of bankruptcy or having to shift entirely to the risky high-end segment.

However, giants like Apple and Samsung are predicted to weather the storm better thanks to customer loyalty and high profit margins.

Consumers are being put in a difficult position: either they have to pay higher prices for used devices, or they have to settle for lower-spec models at mid-range prices.

The situation is projected to only begin to stabilize around mid-2027, when the new factories become operational, but until then, the smartphone market will remain in a state of "red alert".

Source: https://znews.vn/cuoc-khung-hoang-smartphone-dang-den-gan-post1630751.html