Global demand for consumer electronics products such as smartphones, personal computers, and gaming consoles is projected to decline this year.

Global demand for smartphones, personal computers, and handheld gaming devices is projected to decline this year. This is due to a range of companies, from the UK's Raspberry Pi to HP Inc., raising product prices to offset the sharply rising cost of memory chips.

The rapid pace of AI infrastructure development by American tech giants like OpenAI, Google, and Microsoft has "swallowed up" a large portion of the global memory chip supply. This has driven up prices, forcing component manufacturers to prioritize allocating resources to data centers – which offer higher profit margins – instead of consumer devices.

In recent months, the world's three largest memory chip manufacturers—Samsung, SK Hynix, and Micron—have all indicated they are struggling to meet market demand. However, thanks to soaring semiconductor prices, these giants still reported strong quarterly business results.

However, this price surge is creating ripple effects across the consumer market. Market research firms IDC and Counterpoint are now both forecasting a decline in global smartphone sales of at least 2% this year. This represents a sharp reversal from their earlier forecasts of growth. If this prediction is correct, it would mark the first year of decline since 2023.

Similarly, according to IDC estimates, the personal computer market is projected to decline by at least 4.9% in 2026, after achieving 8.1% growth last year. Meanwhile, data from research firm TrendForce shows that gaming console sales are also forecast to decline by 4.4% this year, following an estimated 5.8% growth in 2025.

While many companies have raised prices, giants like Apple and Dell are facing a dilemma: either absorb the costs and sacrifice profit margins, or pass those costs on to consumers and risk reducing purchasing power. According to Jacob Bourne, an analyst at market research firm Emarketer, manufacturers may accept some of the increased costs, but given the current shortages, consumer prices will inevitably rise. He predicts this will lead to sluggish consumer electronics sales in 2026.

Pressure is mounting as forecasts suggest the price surge will continue, possibly into next year. Counterpoint estimates memory chip prices will rise by 40% to 50% in the first quarter alone, following last year's 50% increase.

Last year, TrendForce reported that Dell and Lenovo planned to raise prices by up to 20% by early 2026. In November 2025, HP CEO Enrique Lores announced the company would increase PC prices due to significantly rising memory chip costs. Meanwhile, the Raspberry Pi CEO, in a blog post in December 2025, also announced a price increase for the device.

Tobey Gonnerman, president of semiconductor distributor Fusion Worldwide, said that in the past two quarters, some products have seen price increases of up to 1,000%, and the trend is not stopping. He warned consumers will soon have to pay significantly higher prices for laptops, mobile phones, wearables, and gaming equipment.

Analysts believe this impact will be most pronounced for manufacturers of mid-range and low-cost devices, such as Chinese smartphone manufacturers Xiaomi and TCL Technology, and computer company Lenovo.

The weakening demand outlook could also strain sales at electronics retailers like Best Buy. Last year, the company warned that price increases due to tariffs could deter potential buyers.

Meanwhile, some analysts believe that Apple, with its large scale, pricing power, and extensive supplier network, is better positioned to weather the "storm" of rising memory chip prices than smaller competitors.

This company typically keeps the prices of its flagship iPhone line stable in the US between its annual September launch events. Last year, Apple absorbed hundreds of millions of dollars in tariff-related costs instead of passing that burden on to customers.

William Kerwin, an analyst at financial services firm Morningstar, commented that Apple is better positioned to purchase components by using contract pricing (instead of the more volatile spot pricing), thus securing better prices. However, he also noted that Apple is not entirely immune and may still need to raise prices to offset rising input costs.

Source: VTV

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