Surging memory costs are about to reshape the economics of the global personal computer (PC) and mobile smartphone markets, and not in subtle ways.
I see this as more than a cyclical component spike; it is a structural stress test for hardware vendor business models, channel strategies, and digital transformation roadmaps.
When DRAM and NAND become the scarce fuel of an AI‑driven world, every assumption about price bands, refresh cycles, and good-enough devices comes under pressure.
Device Memory Market Development
Gartner now expects soaring memory costs to drive worldwide PC shipments down 10.4 percent and smartphone shipments down 8.4 percent in 2026 versus 2025 – that's the steepest contraction in device shipments in over a decade.
This is not about weak demand for compute; it is about a single component class overwhelming the bill of materials and forcing difficult trade‑offs.
The key number: combined DRAM and SSD prices are forecast to surge by about 130 percent by the end of 2026. That increase alone is expected to push average PC prices up by 17 percent and smartphone prices up by 13 percent compared with 2025 levels.
Device manufacturers must either absorb the cost and watch margins erode, or pass it on and watch unit volumes fall; and Gartner’s forecast implies most will choose margin preservation over chasing volume at any price.
For device vendors that have spent years optimizing cost structures to hit aggressive entry‑level price points, this is a profound reversal.
Memory is projected to rise from 16 percent of PC bill of materials in 2025 to 23 percent in 2026, turning what used to be one line item among many into a dominant profit lever.
The End of True Entry‑Level Devices
Perhaps the most striking implication is Gartner’s view that the sub‑$500 entry‑level PC segment will effectively disappear by 2028.
When memory alone consumes nearly a quarter of the BOM, the room left for CPUs, displays, connectivity, and industrial design in a budget device narrows to the point of being untenable.
Gartner expects this pressure to be most acute in low‑margin, price‑sensitive segments.
Entry‑level Windows laptops for education, basic SMB use, and emerging markets face a squeeze: either they ship with visibly compromised specs that undermine user experience, or they cross psychological price thresholds that send buyers looking for alternatives.
A similar pattern is expected in smartphones, where basic models will take the biggest hit as memory‑driven price increases push buyers toward refurbished or second‑hand devices or lengthen replacement cycles.
Premium devices, in contrast, are relatively insulated. Higher margins and customer willingness to pay for Applied-AI capabilities, better cameras, and premium materials make it easier to absorb component inflation or reposition products slightly higher in price tiers.
Gartner even notes that higher AI PC prices may delay AI PC penetration reaching 50 percent of the market until 2028, slowing what many vendors had assumed would be a rapid AI‑everywhere inflection.
For channel partners and OEMs, the strategic shift is clear: the growth and margin pool is moving up and over; up the value stack and over to adjacent offerings like services, warranties, and device‑as‑a‑service models, rather than down into volume‑driven, low‑end hardware.
Longer Device Lifecycles and Mounting Risk
One of the most consequential, but often underappreciated, effects of rising device prices is on lifecycle management. Gartner expects PC lifetimes to increase by about 15 percent for business buyers and 20 percent for consumers by the end of 2026.
On the surface, that looks like a cost saving; in practice, it transfers risk from enterprise CFOs to CISOs and CIOs. Longer device refresh cycles mean more endpoints running older operating systems and firmware, often beyond the period of full vendor support.
Gartner explicitly flags increased exposure to security vulnerabilities and greater challenges managing aging devices as organizations delay upgrades.
In regulated industries or zero‑trust initiatives, this creates an uncomfortable tension: budgets will feel less flexible just as the security case for modernization strengthens.
On the consumer side, extended device life will amplify fragmentation in OS and app support.
Developers and platform owners will need to decide how far back to support legacy devices whose hardware was never designed for today’s AI‑centric workloads, while operators and retailers may see refurbished devices play a larger role in their portfolios.
Outlook for Device Market Growth Potential
Three key trends and growth opportunities emerge from this disruption.
- Value will increasingly shift from pure hardware volume to orchestrated device ecosystems and services. Vendors can package PCs and smartphones with cloud management, security, AI productivity tools, and predictable lifecycle economics.
- The rise of refurbished and second‑life devices will become a mainstream, strategically managed channel rather than a peripheral afterthought.
- AI‑driven devices will need a thoughtful, outcomes‑based narrative to justify their higher price points in an environment of constrained budgets.
Surging memory costs are acting as a forcing function for the entire device value chain. They are accelerating the shift toward premium, service‑wrapped, AI‑capable ecosystems, while simultaneously expanding the role of refurbished hardware and longer lifecycles.
"Overall, device vendors and channels face a critical window in the first half of 2026 to optimize pricing and protect margins before component inflation compresses profitability from the second quarter onward," said Ranjit Atwal, senior director analyst at Gartner.
That being said, I believe for vendors willing to rethink their economics and engagement models, this memory shock is less an existential threat and more a catalyst to exit commodity traps and build more resilient, value‑centric device market development strategies.