Jan 22 (Reuters) – Global demand for smartphones, personal computers and gaming consoles is expected to shrink this year as companies from Britain’s Raspberry Pi to HP Inc raise sticker prices to offset surging memory chip costs.
The rapid build-out of artificial intelligence infrastructure by U.S. tech firms such as OpenAI, Alphabet-owned Google and Microsoft has absorbed much of the world’s memory chip supply, pushing up prices as manufacturers prioritize components for higher-margin data centers over consumer devices.
Samsung, SK Hynix and Micron, the world’s three largest producers of memory chips, have said in recent months that they were struggling to keep up with demand as they reported rosy quarterly earnings on the back of surging prices for their semiconductors.
But the price surge is rippling through consumer markets.
Research firms IDC and Counterpoint both now expect global smartphone sales to shrink at least 2% this year, in a sharp reversal from their growth outlook a few months ago. That would mark the first annual decline in shipments since 2023.
The PC market is expected to shrink at least 4.9% in 2026, IDC estimated, after an 8.1% growth last year. Meanwhile, console sales are expected to fall 4.4% in the current year after an estimated growth of 5.8% in 2025, according to TrendForce.
TOUGH CHOICES FOR MANUFACTURERS
While several firms have already raised prices, industry heavyweights Apple and Dell face a tough choice: take on the costs and sacrifice margins or pass them onto consumers at the risk of stifling demand.
“Manufacturers might absorb some costs but given the scale of the shortage, it is certainly going to show up as higher prices for consumers,” Emarketer analyst Jacob Bourne said.
“It is going to result in more tepid consumer device sales in 2026. It will be a challenge for these companies that are trying to sell products during a time of broader inflation.”
Pressure is being compounded by expectations that the price increases will persist, possibly into next year. Counterpoint estimates that memory prices will jump 40% to 50% in the first quarter, after last year’s 50% surge.
“Over the last two quarters, we’ve seen 1,000% price inflation in some products and pricing is continuing to rise,” said Tobey Gonnerman, president of semiconductor distributor Fusion Worldwide.
“Consumers can expect to pay significantly higher prices for laptops, mobile phones, wearables and gaming devices very soon.”
Analysts believe the impact is likely to be most pronounced for manufacturers of low- and mid-range devices, such as Chinese smartphone makers Xiaomi and TCL Technology and PC firm Lenovo.
