The smartphone market is expected to see its biggest-ever contraction this year, as severe memory shortages constrain supply and push up prices, IDC said.

Shipments of smartphones are projected to decline 12.9 percent to 1.12 billion units over 2025, the analyst firm said in a study.

This “crisis like no other” is a major revision downward from previous estimates, and reverses years of gradual gains by smartphone makers.

The memory shortage affects both DRAM from processing tasks and NAND for storage, IDC said.

The figures are the latest indication of how huge demand for AI infrastructure by large tech companies including Amazon, Meta, Microsoft and Google, including demand for high-end memory chips, is leading to severe bottlenecks for other types of electronics.

Smartphone makers are accommodating to the crisis by reducing specifications and eliminating less profitable lower-end models.

Companies like Apple and Samsung, which dominate the world smartphone market, are likely to gain market share while smaller companies selling lower-end devices struggle, IDC said.

The analyst firm said it does not see price dynamics returning to 2025 levels even after memory supply stabilises by mid-2027.

The sub-$100 (£74) smartphone market is likely to become permanently uneconomical, the company said.

It expects the average selling price of smartphones to surge 14 percent to a record $523 this year as manufacturers shift toward higher-end models.