A smartphone storm is coming, but Apple already built a shelter
It’s common knowledge that the smartphone market is not in a good place right now. But new research has revealed the unprecedented severity of the problem, the likely timeframe before things get better, and the one company that’s best placed to survive the ordeal. Spoiler: it’s Apple.
According to analysts at IDC (via Bloomberg), the global memory shortage will cause the smartphone market to shrink by 12.9% in 2026. That’s a shortfall of roughly 160 million units that were sold last year and won’t be sold this year, a situation the research firm characterised as “a crisis like no other.” And most of the impact will be felt by companies making cheap Android handsets.
The problem is related to AI, which is sucking up resources that would otherwise be available for phone manufacturers and causing prices for memory to spike. Budget phones have very slim profit margins, so their makers are unable to absorb the cost increases; instead they have to compromise on component choices or put up their prices. And the market is so competitive, and price such a high priority for customers in that space, that this inevitably results in lower sales.
“The tariffs and pandemic crisis seem a joke compared to this,” said Nabila Popal, senior research director at IDC. “The smartphone market will witness a seismic shift by the time this crisis is over, in size, average selling prices and competitive landscape.”
Popal added that the situation is unlikely to improve until mid-2027, at the earliest. And even then, things won’t go back to the way they were. “The days of cheap smartphones are gone, as even when the crisis is over, we don’t expect memory prices to go back down to 2025 levels,” she explained.
It’s fortunate for Apple, then, that it got out of the budget smartphone market at what increasingly looks to have been the perfect time. Until last spring, the company sold a single cheap phone, the $429 iPhone SE, alongside its premium iPhone 16, 16 Pro, and 16 Pro Max models. But it replaced this with the $599 iPhone 16e and has never looked back. (In terms of intent, at least. It’s debatable whether the 16e has matched the popularity of the SE handsets.) In a matter of days, we expect the company to launch the iPhone 17e at a similar price point.
Apple and its iPhone range, which ranges from the mid-market to the premium end (and with the launch of the iPhone Fold, is expected to enter the extreme premium market) is therefore better placed than most to weather the storm. But it isn’t immune, as the company itself has acknowledged. In its most recent earnings report, Tim Cook said RAM price increases did not affect Apple in Q1 2026, but admitted the company is now “in a supply chase mode,” and experiencing supply constraints like the rest of the industry.