Smartphone Shipments Drop 22% Amid Memory Crisis

IDC's latest report confirms a sharp decline in global smartphone shipments, with a 22% year-over-year drop to 255.3 million units in the third quarter. The AI-driven memory chip shortage has pushed component costs to record levels, forcing manufacturers to raise prices and squeeze margins. Senior IDC research director Nabila Popal noted that the downturn has materialized, but warned the worst is yet to come. Memory costs have surged over 350% since last year, with continued pressure on vendor margins and shipment volumes. While the rate of increase has slowed slightly, costs remain high across other key components, compounding the industry's challenges. IDC expects shipment growth to remain constrained through 2027, with recovery potentially delayed until 2028. The cost shock has disproportionately affected Chinese brands, which rely heavily on budget markets. In contrast, Apple and Samsung are gaining share due to their premium offerings and supply advantages. IDC's report aligns with Loop Capital analyst John Donovan's earlier warning of a continued decline, emphasizing the long-term impact of the memory crisis on the industry.