Smartphone Shipments Hit Lowest Q2 Since 2013 Amid Memory Shortage

Global smartphone shipments experienced an 11 percent decline in the most recent quarter, marking the lowest second-quarter figures recorded since 2013. Analysts attribute this substantial downturn to a critical shortage of memory components, specifically DRAM and NAND chips.

The scarcity of these essential components is largely driven by manufacturers prioritizing production for the booming AI computing sector. This strategic shift diverts resources away from consumer electronics, leading to increased costs for components used in smartphones and personal computers. As memory prices escalate, consumer demand for new smartphones has consequently weakened.

The impact of rising memory costs is disproportionately affecting the budget smartphone market. Research indicates that for devices priced at $500 or less, memory can now constitute up to half of the total manufacturing cost. These lower-cost devices have seen more significant and rapid price increases compared to flagship models.

While high-end smartphones also face increased memory costs, which now represent more than a quarter of their production expenses, these premium devices still offer manufacturers greater profit margins. This dynamic suggests a continued focus on the premium segment despite the broader market contraction.