Global personal computer (PC) shipments dropped 20.1% year-on-year in the third quarter of 2026, falling to 62.7 million units from the 78.5 million units recorded a year earlier, according to IDC's latest report. The steep decline underscores both the market's ongoing struggles and the mounting pressure the artificial intelligence (AI) boom has placed on PC production.

The Q3 drop marks the second consecutive quarterly decline and is steeper than the 3.8% dip recorded in Q2 Beyond the diversion of memory chips toward AI-focused facilities such as data centers and advanced AI models, the current PC supply position has also been shaped by continued inventory reduction and production repositioning among vendors.

According to the report, it is one of the weakest third quarters in recent years, despite the period typically benefiting from a seasonal lift driven by back-to-school demand. Instead, the sharp 2026 decline reflects a market that has spent the year contending with widespread price increases.

None of the top five market leaders escaped the downturn. HP Inc. posted the steepest decline at 30.9% year-on-year, Lenovo fell 22.6%, and Dell Technologies dropped 25%. Apple saw shipments decline 11.3%, while ASUS recorded an 8.6% fall. The breadth of the declines underscores that the component squeeze is weighing on every major vendor regardless of operating system or market segment.

Vendors looking to navigate the current dynamics have considered raising inventory to get ahead of further price hikes. While that may be a straightforward decision on the supply side, buyers remain the bigger hurdle. The report repeatedly notes that PC vendors fear elevated inventories could collide with weak demand at high prices, with projections that they will ultimately settle on promotions in the coming months — setting up the final stretch of 2026 as a test of whether discounts can actually clear elevated inventories.

In 2026, the global AI boom has triggered a broader crisis across the PC and smartphone markets, driven by a severe memory shortage, chip-driven inflation, and tightening storage component supply. Major chipmakers — including Nvidia, Samsung, SK Hynix, and Micron — have redirected manufacturing capacity toward High-Bandwidth Memory (HBM) and concentrated chips for AI data centers, at the expense of the standard consumer DRAM and NAND flash used in mainstream devices. Device prices have responded by climbing sharply.

IDC's industry tracking shows the memory squeeze has pushed device prices up by 10% to 23%. In 2026, MacBooks, iPads, and Windows laptops have seen price jumps of $100 to $400, with typical budget laptops climbing from the $400–500 range to nearly $700 — a shift that has effectively eliminated the sub-$500 price point from the mainstream laptop market.

The price shock has rippled through the entire PC shipment cycle. In Q1 2026, global PC shipments reached 65.6 million units, up 3.2% year-on-year, boosted mainly by the Windows 10 migration as users upgraded ahead of the operating system's end of support. Q2 2026 then saw the market fall 4.9% year-on-year to 68.2 million units — the first drop in two years — attributed to component and memory shortages and escalating geopolitical pressures.

The smartphone market is telling a familiar story, now entering a new dimension. Amid the ongoing shock, vendors and smartphone makers (OEMs) are allocating limited microchips and memory to higher-margin premium devices rather than entry-level phones. A Counterpoint Research report supports this trend, showing 5G smartphone shipments rose 8% year-on-year across the Middle East and Africa (MEA) in Q2 2026.

Sub-$100 entry-level smartphones and ultra-cheap budget phones are vanishing as memory now makes up more than 60% of their bill of materials. With earnings projections in focus, OEMs are channeling limited resources toward devices around the $200 mark, hitting low-income and emerging markets the hardest.

PC vendors are now avoiding mass production and pulling back on volume amid the component crisis driven by the AI boom, which has driven up manufacturing costs, left inventory levels uncertain, and weakened consumer demand.

"Channels are now worried about carrying too much inventory into a market where high prices are suppressing demand. That could translate into promotions and some short-term relief for consumers, but we don't expect pricing anywhere near what it was a year ago. With macro conditions worsening, the risk is that the outlook for the next few quarters gets worse before it gets better," said Jitesh Ubrani, research director for consumer devices at IDC.

Even so, prices are expected to remain elevated, well above their levels at the same time last year. "Prices will remain elevated," Ubrani added, noting that promotions will be used to boost sales.

The situation presents a headache for vendors, whose warehouses are filling with expensive devices that cannot easily be cleared through traditional discounting given the costly chip components used in manufacturing. Initiating mass production now could either ease or worsen the inventory bottleneck. How vendors time that decision, and whether those anticipated promotions arrive in the final quarter, will be among the key signals to watch as 2026 closes.