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Global smartphone shipments fell 11% year-on-year in Q2 to their lowest level since 2013, driven by AI-caused memory shortages and rising prices. China experienced the largest decline, with three of its top five suppliers seeing sales drop for the fifth consecutive quarter, while Apple and Samsung maintained stable prices and saw slight sales growth.

Budget smartphones face declining sales and rising costs due to memory and storage chip shortages driven by the AI boom. Memory costs now comprise over 60% of materials for sub-$400 phones, forcing companies like OPPO and Xiaomi to raise prices. Omdia predicts a 22% decline in this market segment in 2024.

Rising component costs, particularly for DRAM and NAND, are driving up PC prices and eroding sales of sub-$500 models. US PC unit sales fell 7% year-on-year in Q1 2024, with HP losing its top position to Dell, as memory shortages and AI server demand shift supply chains.

Micron secured 16 strategic customer agreements (SCAs) to maintain high memory prices from 2026 to 2030, ensuring robust gross margins. The CEO cited supply shortages and production challenges due to complex memory technologies, while Q3 revenue hit $41.5 billion with record profits and margins. Future growth is expected as SCAs cover 40% of revenue and fund fab expansions.

PC prices in Europe have risen by double-digit percentages due to shortages of DRAM and NAND memory, driven by increased demand for high-bandwidth memory in AI servers. Notebook and desktop prices climbed 11.4% and 10.5% year-on-year, respectively, despite declining unit sales, as manufacturers prioritize premium devices amid supply chain constraints.

Samsung executives warn the company could face its first net loss on smartphones in 2026 due to rising costs of AI-related components like DRAM and NAND. The maturity of smartphones and competition in AI hardware, including Nvidia's Vera AI CPU, are cited as key challenges. Samsung's MX division head, TM Roh, highlighted concerns despite strong Galaxy S26 sales.