Counterpoint warns of a "chip shortage crisis": AI is not full yet, consumer electronics may fall first.

According to industry tracking agency Counterpoint Research, due to a shortage of memory chips leading to rising costs and decreasing production capacity, global smartphone shipments may decrease by 2.1% next year. This marks a significant reversal from the expected growth of 3.3% this year, with the leading research company drastically reducing its projected growth for 2026 from the previous forecast of 0.45%. A research report released by Counterpoint on Tuesday stated that due to an overall increase in electronic component costs of 10% to 25%, the average selling price of global phones is expected to rise by 6.9% next year. This year, the rapid development of artificial intelligence globally has led semiconductor manufacturers to prioritize the production of advanced memory chips for NVIDIA accelerators rather than more basic products. This in turn has exacerbated the shortage of DRAM chips, which are crucial for electronic products ranging from laptops, electric cars to medical devices and household appliances. Earlier this month, American storage chip giant Micron Technology announced plans to stop selling storage products to individual consumers in the PC/DIY market in order to focus its capacity on providing enough storage products for high-performance AI chip-driven computational clusters. This move by Micron highlights the strongest profit sector in the storage products field and the transfer of pricing power from the PC/smartphone growth cycle to a "storage industry super cycle" dominated by large AI data centers. Furthermore, in October, SK Hynix announced that all of its storage chip orders for next year have been sold out, and Micron expects the tight supply situation to continue until 2026. Driven by the prospect of tight supply, Japanese NAND flash maker Kioxia's stock price has surged several times since its listing in December of last year. SK Hynix previously predicted that the memory shortage would persist until the end of 2027, meaning that the impact of this crisis will extend beyond 2026. Consumers planning to upgrade next year are advised to act before prices rise significantly. With increasing price pressure on the low-end smartphone market, the prospect of slowing growth in the global smartphone market is becoming more apparent. In recent months, many consumer electronics manufacturers have issued warnings about price increases, while some PC manufacturers have begun to stockpile memory to cope with rising costs. For example, Dell Technologies, HP, and other tech companies warned last month that there may be a shortage of memory chips next year due to the increased demand for memory chips brought about by the construction of artificial intelligence infrastructure. Nintendo's stock price has been falling for most of December as people are increasingly concerned about the impact of price increases on its flagship game console, the Switch 2, and its profitability. Due to lower profit margins, some low-end smartphone brands are considered more vulnerable. Counterpoint indicates that the shortage of memory chips is particularly likely to impact entry-level smartphones. Many companies lack the scale and bargaining power of Apple or Samsung, making them highly susceptible to the impact of skyrocketing memory costs. Entry-level smartphones priced below $300 face the most serious threat as manufacturers cannot offset the effects of price increases without severely impacting sales. According to TrendForce's analysis report in December 2025, entry-level devices are at the forefront. Smartphone memory inventory has fallen below a 4-week supply, and even high-end manufacturers will face pressure to pass on costs to consumers. Shortages of DRAM and NAND flash memory have already emerged, with no room for any component substitution. Industry analysts predict that the most serious price increases will come in the mid-2026, when new production contracts take effect. Manufacturers who signed long-term agreements before the shortage occurred will face rising costs starting in the second to third quarter of 2026. Both IDC and Counterpoint Research have warned that the average selling price of smartphones will significantly climb in the first half of next year. Counterpoint senior analyst Yang Wang stated, "Apple and Samsung are most capable of weathering the next few quarters. But for other companies that do not have enough flexibility to balance market share and profit margins, the situation will be very difficult. Over time, we will see this situation especially reflected in some Chinese OEM companies." Faced with this memory crisis, device manufacturers have almost no effective response. Supply chain experts point out that chip manufacturers are deliberately tightening supply in order to maximize profits. As demand from AI data centers dominates production allocation, manufacturers cannot simply switch suppliers or use alternative memory. Research companies suggest one strategy is to encourage companies to guide users to purchase higher-end models, which would have a lesser impact on profits. Counterpoint points out in its report that other options include reusing old components, reducing other configurations such as cameras. Some companies may try to reduce memory specifications - reducing memory or storage space in low-priced models - but this approach could harm competitiveness. Other companies may temporarily absorb costs and then pass them on to consumers at the end of 2025 and the beginning of 2026. The smartphone industry faces an inevitable choice: either significantly raise prices or watch profit margins shrink.