Global smartphone sales have suffered their sharpest decline in over a decade, as a result of surging hardware costs driven by the unprecedented artificial intelligence boom.

Data from reveals that worldwide smartphone shipments plummeted by 22% in the third quarter, dropping to 255 million phones – the worst performance recorded since 2013.

The severe contraction is driven by skyrocketing component costs, particularly memory chips. Massive demand from AI data centres training and running complex models has caused memory prices to surge by as much as 350% this year.

Because memory accounts for up to half of a smartphone’s manufacturing cost, major chip suppliers have heavily prioritised profitable AI infrastructure components over consumer electronics.  

The downturn is reflected across the globe. In China, smartphone shipments dropped by 15.4% year-on-year to 57.9 million units in the third quarter, marking a sixth consecutive quarter of contraction.

Amid weak consumer spending and rising retail price tags, Huawei stood out as the only major vendor to post double-digit growth in China, capturing a 21% market share with 12.2 million units shipped. Meanwhile, rival brands including Apple, Xiaomi, Vivo, and Oppo experienced shipment declines.

As higher costs reach shop shelves globally, analysts note that consumers are increasingly holding onto their existing devices longer, lengthening replacement cycles. With memory prices continuing to climb, IDC warns that the widespread sales slump is likely to persist well into next year.

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