The next wave of smartphones and PCs will have less memory and fewer capabilities, yet are likely to cost consumers 14 percent more as AI ambitions eat all available memory supplies, according to researchers at IDC.
IDC said that the worsening memory market has caused its outlook to deteriorate just since December. The analysts are penciling in a decline in the PC market of 11.3 percent in 2026 – about 26 percent worse than they had guessed in December – and a decline in the smartphone market of 12.9 percent, which is more than double the 5.2 percent drop they predicted as a worst-case scenario just two months back.
“This is perhaps the biggest challenge the industry has faced since its inception,” said Nabilia Popal, IDC’s senior research director global consumer devices, during a roundtable video discussion posted Thursday. “This is not just a temporary situation. This is going to result in a structural reset of the entire industry, in terms of size, in terms of competitive landscape, of the product mix and also on the price.”
To mitigate the cost and the short supply, IDC expects consumers to hang on to devices longer, or turn to used and refurbished units. Device makers meanwhile are likely to downgrade memory on their least expensive devices, optimize features around using less memory, or in some cases turn to Chinese suppliers that they’ve avoided over geopolitical or technical concerns.
“Any meaningful impact is expected to take some time,” Jeff Janukowicz, research vice president at IDC, said in a video posted Thursday. “So ultimately, from our perspective we continue to see a challenging environment in 2026. That’s likely to push into 2027.”
IDC is not alone in sounding the alarm. Researchers at Gartner this week also said some types of memory have doubled or quadrupled in price since last year, and Gartner believes DRAM and NAND flash used in PCs and phones is set for a further 130 percent rise by the end of 2026.
Gartner is projecting a drop in PC shipments of more than 10 percent during 2026, and a decline of around 8 percent for smartphones, all due to the AI-driven memory shortage.
In the PC market, IDC expects the shortages to begin in the second quarter as smaller vendors struggle to obtain supplies unit volumes will “fall off dramatically,” researchers wrote.
During its earnings call on Thursday, Dell’s chief operating officer and vice chairman Jeff Clarke said DRAM prices over the last 6 months are up nearly 5.5x, at $2.39 a gigabit. Meanwhile the cost of NAND is $0.20 a gigabyte; that’s up nearly 4x over the last 6 months. He said that analysts are predicting prices in Q2 to be 20% to 50% higher.
In October, Dell reduced the price of PCs to win market share, then in January, the company increased the cost of PCs to adjust for higher memory prices. At the time, the OEM had tens of thousands of deals in the pipeline that had prices adjusted upwards, which immediately took pressure off Dell’s margins, Clarke said.
“In PCs, we purposely delayed implementing that price move to stay in the hunt to take share and to drive growth, which will serve us for the long run,” Clarke said. “And then when we made the change on January 6, it wasn’t 90 days later, it was that day we stabilized margins,” he said.
During its earnings call this week, HP revealed that memory now accounts for 35 percent of the cost of materials it needs to build a PC, up from between 15 and 18 percent last quarter. The company expects to see memory prices increase 100 percent sequentially into the next quarter, according to HP CFO Karen Parkhill. The company said it has raised PC prices as a result.
And earlier this month Lenovo’s PC boss Luca Rossi said that they will raise their average selling price for PCs in 2026, as the number of available PCs will likely drop.
“At the moment, we are modeling a mid-single-digit decline for the units. But that decline will be offset by a higher ASP (average selling price) and likely a favorable product mix,” Rossi told investors on Feb. 12. “Hence, the value of the market will not decline. For Lenovo, we will continue to grow at premium to market.”
Janukowicz said with the top four cloud service providers projected to spend $600 billion this year on AI build outs that require DRAM and NAND – some 70 percent more than last year – the cost of memory will likely not stabilize until 2027.
“This is not necessarily a short disruption and it reflects a structurally tight environment. This is a message that we’ve heard consistently really since the beginning of 2026,” Janukowicz said. ®
