Global smartphone shipments recorded their worst quarter to date, falling 22% year on year in the third quarter, according to market researcher IDC, which attributed the decline to rising memory costs and the continued redirection of available chips toward AI models.

The downturn poses a growing threat to smartphone prices, with entry-level devices priced around $100 expected to take the biggest hit. In extreme cases, this category could be washed off the market altogether, at least for now.

IDC's industry report showed that Chinese brands such as Xiaomi Corp and Oppo took the worst hit among the top vendors, while Apple and Samsung Electronics fared better thanks to their larger inventories of premium handsets. Under new projections, the market is not expected to return to growth until at least 2028.

Earlier this year, IDC had projected that global smartphone shipments would decline 13.9% in 2026. Omdia, another market research firm, expects the market to fall 12.2% year on year in 2026 — a drop of 153 million units, from 1.246 billion units recorded in 2025 to 1.093 billion units.

Rising storage costs over the past year, driven by demand from the AI industry, have squeezed profitability across the mobile sector. Chipmakers have responded by raising prices, trimming specifications and dropping budget-focused, entry-level models. Because memory sits inside every handset produced, the AI-driven component squeeze is surfacing across the entire device market, from entry-level models to flagships.

Prices of existing smartphone models have climbed almost 15% globally in 2026, while newly launched models are roughly 25% more expensive than a year ago. Xiaomi, for example, raised the price of a 128GB Redmi 15C in India from $140 at launch last December to $190 seven months later — a 36% increase. In Southeast Asia, Oppo's sub-$100 phone shipments surged 96%, while Vivo lifted its main entry-level model above $100 in most markets, according to research firm Omdia.

In Africa, 81% of smartphones shipped in 2025 cost less than $200, but shipments of sub-$100 phones fell 34% year on year in the second quarter of 2026. Amid the cost squeeze, shipments of 5G smartphones rose 8% year on year across the Middle East and Africa (MEA) in Q2 2026, as manufacturers allocate limited microchips and memory to higher-margin premium devices rather than entry-level phones.

As companies raise prices and steer consumers toward flagship or ultra models, the long-term trend points to a shrinking market, with vendors that rely on large-scale distribution likely to reduce their inventories. Market leaders have warned that the worst is yet to come — an urgent concern for Sub-Saharan Africa, where the majority of consumers still struggle to purchase entry-level phones.

"Current indicators suggest that the market has not yet reached the bottom," said IDC research director Nabila Popal. "Memory costs have surged approximately 350% since last year and are still rising, creating substantial pressure on vendor margins and shipments. The worst is yet to come."

The GSMA, the global mobile industry association, previously projected that nearly 800 million more people will use mobile internet by 2030. That forecast may now need to be revisited, however, as rising smartphone prices widen the digital inequality gap.

According to GSMA data, about 76% of the population in Sub-Saharan Africa does not own a smartphone, with handset costs relative to income contributing to the affordability barrier. Only about 24% to 25% of the region's population uses mobile internet.

Device affordability is also driving a widening usage gap. Recent reports show that about 60% of people in Sub-Saharan Africa — roughly 710 million people — live within range of a mobile broadband network (3G or 4G) but do not use mobile internet.

More striking still, an entry-level smartphone can cost anywhere from 73% to 95% of an average or low-income earner's monthly wage in the region, and up to 99% for the poorest 20% of earners. That arithmetic explains why further price increases bear hardest on the very households the industry's connectivity forecasts depend on.

Component scarcity and surging memory chip costs, driven by global AI data center demand, have made ultra-budget devices harder to manufacture and more expensive for lower-income consumers to purchase. Those priced out of new smartphones are turning to buy-now-pay-later (BNPL) arrangements, financing schemes from companies such as M-Kopa, or the refurbished market. The trajectory of memory costs, which Popal said are still, and the strain on these coping channels are the immediate markers to watch as the market heads toward IDC's earliest projected return to growth in 2028.