The International Data Corporation (IDC) has published a new update to its device market outlook, and the message is blunt: things are getting worse. Under newly-reported pessimistic scenarios, shipments of PCs could shrink by up to 9% in 2026, with a more moderate scenario showing a 5% shrinkage in the market. These figures have been revised from a 2.5% drop, which was recently published in IDC's November forecast.
Since then, the global memory shortage, which began accelerating in mid-October, has intensified beyond what IDC originally modeled. While the firm isn't formally rewriting its official forecast entirely, it's now laying out scenarios that are notably more pessimistic than what it projected just a few weeks ago.
The underlying driver is the same force distorting much of the tech industry in late 2025: AI infrastructure. Memory demand from hyperscalers has surged so aggressively that DRAM and NAND production has been structurally redirected away from consumer devices and toward high-margin enterprise components like high-bandwidth memory and dense DDR5. This is an economically rational choice on the part of memory manufacturers, but IDC is clear that this isn't a typical boom-and-bust cycle; it's a strategic reallocation of silicon capacity that could persist for years, not quarters.
For smartphones, the impact is real but uneven. Memory represents a meaningful share of handset bill-of-materials costs, especially in the mid-range, where margins are already thin. IDC warns that OEMs are likely to respond with higher prices, reduced specs, or both, reversing a decade-long trend of bringing flagship-class memory configurations downmarket. As a result, IDC now sees downside risk of a global smartphone market contraction in 2026—potentially as steep as 5% in a pessimistic scenario—alongside an increase in average selling prices and longer replacement cycles.
It's the PC market where IDC's revised outlook feels most disruptive, though. The memory shortage is colliding with two major industry forces at once: the Windows 10 end-of-life refresh cycle and the much-touted push toward "AI PCs." Vendors are already signaling broad price increases as DRAM and SSD costs climb, and IDC now estimates that PC average selling prices could rise by as much as 6–8% under a pessimistic scenario. Unit shipments, meanwhile, could decline nearly 9% year-over-year, which is a significant downgrade from November's already negative -2.4% forecast.
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Larger OEMs like Dell, HP, Lenovo, and ASUS are expected to weather this environment better than smaller vendors thanks to scale, inventory leverage, and long-term supply agreements. Smaller regional brands, white-box builders, and DIY system builders are far more exposed, particularly in gaming PCs, where high memory configurations are standard, and cost sensitivity is high. IDC suggests this dynamic could shift market share further toward major OEMs, even if the overall market shrinks.
There's a particular irony in how this environment intersects with the industry's AI PC narrative. IDC defines an AI PC simply as a system with an NPU, but in practice, these machines also demand more RAM. Microsoft's Copilot+ requirements alone set a 16GB floor, and many premium designs are targeting 32GB or more. The problem is that memory is precisely the component becoming most scarce and expensive. Just as vendors are trying to upsell consumers on AI-branded systems, the economics of building those systems are deteriorating.
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Compounding that tension is the fact that the AI PC marketing push has not produced the growth vendors hoped for. User enthusiasm has been muted, and frustration with the rapid, often forced integration of AI features — particularly in Windows 11 — is increasingly visible. In that context, higher prices for AI PCs look less like an upgrade opportunity and more like a tax on features many buyers didn't ask for.
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