The average global price for a smartphone is set to climb to $581 this year according to research firm IDC. That represents a 27.6% jump over last year as memory component costs continue to spike. Yet overall shipments are plunging toward record lows, creating a market where buyers get squeezed and budget options disappear.
Shipment volume is on track for a steep 16.7% drop, leaving annual volume at just over 1 billion units. But device makers will still make more money overall. Total industry revenue is projected to rise 6.3% to $613 billion because every sold unit carries a much higher price tag. Companies are simply selling fewer phones for more cash.
Surging memory component expenses are the primary culprit behind the sticker shock. Costs for DRAM and NAND flash skyrocketed by more than 300% over the past 12 months. IDC analysts expect these supply pressures to stretch out until at least 2028. Hardware brands absorbed those manufacturing bills early on, but they have now passed those extra costs down to retail customers.
The steepest pain falls on the affordable end of the market during the 2nd half of the year, with total shipments expected to fall 27.2% year over year. The cheapest phones are getting wiped out completely. Last year consumers bought 173 million handsets priced under $100. During Q2 of this year, sales of those entry tier models crashed by almost 60% year over year as manufacturers abandon low margin hardware.
