Fewer Phones, Pricier Phones: Smartphone Shipments Head for a Record 16.7% Drop While Revenue Rises
The AI race is bidding up memory chips, so device makers are selling fewer, dearer gadgets — and investors don’t seem to mind. Your budget might.
By Sean Anees Saifi · Capital Wealth · Published Friday, September 25, 2026 · Source: The Wall Street Journal, Thursday, September 24, 2026 edition, whose market figures are the Wednesday, September 23 close (Heard on the Street)
Key Points
IDC expects global smartphone shipments to fall 16.7% this year — the steepest year-over-year drop on record — and iPhone units to slip 1.3%. Analysts still project iPhone revenue up 17% this calendar year, per FactSet.
The driver is memory, its price pushed up by the AI race: memory was about 16% of a PC’s materials cost last year, and Gartner expects that share to peak at 25%.
Apple (AAPL) raised prices by hundreds of dollars on some Macs and iPads this summer and charged more for its newest iPhones, including the foldable iPhone Duo at $1,999. Budget brands such as Xiaomi, Oppo and Vivo have raised prices on some of their cheapest models, too.
A Gartner analyst has predicted the end of the sub-$500 entry-level PC segment by 2028, and Dell’s chief executive expects people and companies to keep PCs longer and defer upgrades.
Apple’s stock is up about 26% this year. The column’s risks: strained consumer budgets, less generous carrier financing and a growing market in used and refurbished devices.
−16.7%
global smartphone shipments this year, per IDC
+17%
projected iPhone revenue this calendar year
25%
memory’s expected peak share of PC materials cost
$1,999
price of Apple’s foldable iPhone Duo
Bank of America analysts reckon carriers’ fatter trade-in credits cover most of Apple’s price increases this year. The unlimited plan pays for the phone.
In one line: When AI bids up the scarce part, the gadget business stops selling volume and starts selling price — good news for the maker of the part and the premium brand, and a line-item decision for every household.
Here’s a sentence that would’ve read like a typo five years ago: the smartphone business is heading for its sharpest shipment decline on record, and its biggest makers are expected to take in more money anyway. IDC expects global shipments to fall 16.7% this year, which it says would be the steepest annual drop ever, with iPhone units slipping 1.3%. Wall Street analysts, per FactSet, still see iPhone revenue climbing 17% this calendar year.
The culprit is memory. The AI race is bidding up the chips every phone and laptop needs; memory was about 16% of a PC’s materials cost last year, and Gartner expects that share to peak at 25%, Thursday’s Heard on the Street column reports. Makers are passing it along: Apple (AAPL) raised prices by hundreds of dollars on some Macs and iPads this summer, then charged more for the iPhones it launched this month, topped by the foldable Duo at $1,999. Don’t expect the budget brands to exploit the opening; they’re getting squeezed even harder. Xiaomi, Oppo and Vivo have raised prices on some of their cheapest models, and a Gartner analyst has predicted the end of the sub-$500 entry-level PC by 2028.
The column’s bigger point is behavioral: when devices cost more, people keep them longer. Dell Technologies (DELL) chief Michael Dell said this month that companies may wait for employees to complain, or for machines to quit, before replacing PCs. HP (HPQ) finance chief Karen Parkhill summed up the industry’s new bet: “We don’t believe it’s a unit game anymore.” Investors don’t seem to mind so far — Apple’s stock is up about 26% this year.
Our read
We own both sides of this squeeze. Micron (MU) makes the memory the AI race is bidding up, and Apple sells the premium device that can carry a higher price — with help from carriers, whose bigger trade-in credits cover most of this year’s increases, Bank of America analysts reckon. Both stay at weight; we didn’t buy anything new this week. Owning the scarce input and the brand that can pass its cost along means a memory-price swing helps one while it pinches the other, which is diversification you can actually explain (IN04). The column’s risks are the ones we’d watch, too: stretched household budgets, stingier carrier financing and a growing trade in used and refurbished devices.
For the household (M5), the lesson runs the other way. That generous trade-in credit exists because it moves you onto a pricier unlimited plan, so price the phone as the plan: the monthly bill times the months you’re committed, plus the device. Then budget the device line for fewer, better, longer. There’s no cheaper upgrade than a phone kept a fourth year, and a refurbished model deserves a look before a new one does.
What It Means For Your Portfolio
Hold — both sides of the premium squeeze are owned
Micron and Apple stay at weight — the scarce part and the premium brand — with nothing added. The household move is to stretch device cycles and price every phone as the plan it comes with.
General planning principles, not advice for anyone in particular. When an industry’s key input gets scarce, the winners tend to be the supplier of the scarce part and the brands strong enough to pass the cost along, while the budget players in between get squeezed. Know which side of a squeeze your holdings sit on — that’s a reason to understand them, not to chase either one.
For many households, devices have quietly become a subscription: phones, laptops and tablets, often each on its own installment plan. Add them up as one annual line in the budget and set the replacement schedule on purpose, not on promotion day.
