Smartphone Market Faces 'Worst Year on Record' Due to Iran, Memory Crunch

Smartphone Market Faces 'Worst Year on Record' Due to Iran, Memory Crunch | PCMag

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Yikes: The smartphone market is expected to suffer an even deeper slump due to the ongoing US-Iran conflict, according to research firm IDC. IDC already predicted that global smartphone shipments would fall 12.9% this year, citing the ongoing AI-driven memory shortage. But on Tuesday, the company forecasted an even worse decline of 13.9%, blaming the US-Iran war for further sapping demand. “The smartphone market is headed into its worst year on record,” IDC said in a research note, calling it “the steepest annual contraction in smartphone history,” assuming the projection holds.   You May Also Like

(Credit: IDC)

Rising gas and oil prices resulting from the blockade of the Strait of Hormuz mean smartphone vendors face higher costs, including for the transportation of goods and components.  “Combined, these pressures are compelling vendors to reduce shipments, raise prices, and concentrate on higher price tiers—elevating smartphone ASP [average selling price] to a record $550, up $100 from last year,” says IDC research director Nabila Popal. The $550 figure is also up from the previously projected $523 ASP for this year.  

(Credit: IDC)

In another bad sign, IDC projects smartphone shipments will fall next year too, amounting to a 1% year-over-year decrease, rather than starting to recover, as it originally forecasted. The good news is that consumers in North America probably won’t see as much impact, since smartphone pricing is already high here. Instead, emerging markets, where $200 phones are more common, will see the most pain, IDC says. In the Middle East and Africa, smartphone shipments are projected to fall 23% Recommended by Our Editors The Best Phones With a Headphone Jack in 2026 Android vs. iPhone: Which OS Dominates in the 2026 Smartphone War? Motorola Razr Ultra vs. Samsung Galaxy Z Flip 7: Is One of These Flip Phones More Sensible Than the Other?

“For consumers, it means the era of ultra-cheap smartphones is over,” Popal adds. Still, IDC maintains that Apple and Samsung might benefit from the dire situation by attracting customers usually served by smaller Android players. “A combination of secured memory supply, a stronger Galaxy S26 line-up, and aggressive midrange positioning is allowing Samsung to capture demand that smaller Android vendors simply cannot serve as memory costs squeeze their bill of materials,” IDC says. 

About Our Expert Michael Kan Principal Reporter Experience I've been a journalist for over 15 years. I got my start as a schools and cities reporter in Kansas City and joined PCMag in 2017, where I cover satellite internet services, cybersecurity, PC hardware, and more. I'm currently based in San Francisco, but previously spent over five years in China, covering the country's technology sector.Since 2020, I've covered the launch and explosive growth of SpaceX's Starlink satellite internet service, writing 600+ stories on availability and feature launches, but also the regulatory battles over the expansion of satellite constellations, fights with rival providers like AST SpaceMobile and Amazon, and the effort to expand into satellite-based mobile service. I've combed through FCC filings for the latest news and driven to remote corners of California to test Starlink's cellular service. I also cover cyber threats, from ransomware gangs to the emergence of AI-based malware. In 2024 and 2025, the FTC forced Avast to pay consumers $16.5 million for secretly harvesting and selling their personal information to third-party clients, as revealed in my joint investigation with Motherboard.I also cover the PC graphics card market. Pandemic-era shortages led me to camp out in front of a Best Buy to get an RTX 3000. I'm now following how the AI-driven memory shortage is impacting the entire consumer electronics market. I'm always eager to learn more, so please jump in the comments with feedback and send me tips. Areas of Expertise Networking Security Graphics Cards Processors AI SpaceX Nvidia AMD Latest By Michael Kan This Orbital Data Center Startup Is Integrating Starlink Lasers AI Chatbot Site Needs 'Masturbation Consultants,' Will Pay $2,000 Per Month Hackers Exploit GTA 6 Hype to Spread Malware Via Fake Beta Tests Starlink Revives GPS Function, But Only for Priority Plans Kash Patel's Apparel Site Is Trying To Trick Visitors Into Installing Malware More from Michael