The smartphone industry is experiencing one of those awkward shifts that doesn’t stem from a “big innovation,” but rather from a fundamental yet strategic component: memory. In a market where performance is no longer judged solely by the processor, but by the balance between DRAM, storage, and AI acceleration, the availability—and price—of these memory chips is increasingly dictating the pace of everything else. This directly impacts two key players that traditionally operate comfortably at the top of the supply chain: Qualcomm and Arm.
The paradox is clear. While data centers race to build large-scale AI infrastructure, the “mundane” hardware supporting mass-market devices (smartphones, tablets, laptops) competes for the same industrial resources. Major memory manufacturers are dedicating more capacity to advanced products like HBM (high-bandwidth memory) for AI accelerators, and this decision creates a ripple effect: less margin for conventional DRAM and, consequently, increased tension in the consumer electronics supply.
Qualcomm: record earnings but clear warning about the bottleneck
Qualcomm closed its first fiscal quarter of 2026 with figures hard to dispute on paper: $12.3 billion in revenue (a quarterly record) and $3.50 EPS (non-GAAP), driven by high-end demand. In its QCT segment, the company reported $10.6 billion in revenue, with $7.8 billion from “handsets,” along with growth in IoT ($1.7 billion, +9% YoY) and automotive ($1.1 billion, +15%).
However, the tone shifted when discussing forward-looking expectations. For the second quarter, Qualcomm guided $10.2 billion to $11 billion in revenue, with a non-GAAP EPS of $2.45 to $2.65. The most revealing data point for the mobile sector was another: QCT Handset revenue forecast around $6 billion, reflecting—the company states—the impact of a more limited memory supply across the industry.
Qualcomm straightforwardly explained the issue: “The smartphone market will be affected by the availability and pricing of memory, especially DRAM,” amid a context where manufacturers prioritize HBM for the AI wave in data centers. Practically, this is already influencing some OEM decisions, especially in China, which are reducing chipset inventories and adopting more cautious production strategies.
In everyday terms: it’s not that smartphones are missing processors, but that the “whole package” (DRAM + storage + components) is becoming more expensive and limited in volume, forcing adjustments to configurations, margins, and sometimes timelines.
Arm: more revenue and royalties, but a less predictable mobile market
Arm, instead of selling chips, licenses property rights. Therefore, its figures are often viewed as an early indicator of the ecosystem’s health—covering SoC manufacturers, CPU/GPU designers, and ultimately device makers. In its fiscal third quarter of 2026 (ended December 31, 2025), Arm reported $1.24 billion in revenue, a +26% YoY. Of that, royalties reached $737 million (+27%) and licensing and other income totaled $505 million (+25%).
On paper, the message is optimistic: increased activity, broader adoption, and a suite of products Arm presents as increasingly central to the future of computing. But the reality of the mobile market introduces some noise. Despite a strong product pipeline, memory bottlenecks could reduce unit shipments, which in turn shortens the timeline for certain royalties to materialize. This “braking effect” has prompted some analysts to scrutinize the mobile sector more closely, even as AI narratives drive up appetite for computing power.
What does this mean for the smartphone market in 2026?
When memory becomes tight, not all segments suffer equally. High-end devices tend to have more room to absorb cost increases—and they’re also where the AI “on-device” narrative is strongest. The pressure is particularly concentrated on mid-range and entry-level devices: here, an extra few dollars in DRAM or NAND can completely alter the technical specifications’ balance.
In fact, IDC projects that global smartphone shipments could decline by 0.9% in 2026, mainly due to rising component costs—including memory—in a context where demand is more price-sensitive.
This domino effect is familiar to anyone who’s experienced previous hardware transitions:
- Models with less RAM or lower storage options to protect final price points.
- Increased segmentation (many nearly identical variants) to adjust component availability.
- Production priority shifts: manufacturing higher-margin models first.
- Greater stock volatility: launches with limited initial batches and irregular restocking.
All of this comes at a time when memory is no longer an “extra”: it’s the minimum foundation needed to run modern workloads (computational photography, local AI, gaming, multitasking), leaving less room for maneuver without risking user frustration.
A clash of worlds: AI accelerates… and the mobile sector pays the toll
At its core, the debate is no longer whether AI is transforming the market—it’s widely accepted. The critical issue is that AI is also reshaping the supply chain, and memory is among the most sensitive points. Micron, for instance, has warned that the mismatch between supply and demand for memory could persist, partly due to the structural shift toward higher-value AI-related products.
For Qualcomm and Arm, the challenge in 2026 is similar but follows different paths: continue growing in a market demanding more performance and AI… but face limitations posed by a component that has long been taken for granted.
Frequently Asked Questions
Why does a DRAM shortage impact smartphone sales when chips are abundant?
Because smartphones are not built with only the SoC: if DRAM or NAND are scarce (or prices soar), OEMs reduce production, change configurations, or delay batches.
Which mobile segments are most affected by memory price increases?
Typically mid-range and entry-level: they have less margin to absorb costs and rely more on maintaining a psychological price point.
Can HBM for data centers really “steal” capacity from mobile markets?
Yes: when memory manufacturers prioritize lines and materials for HBM, part of the capacity and industrial focus shifts, stressing the rest of the portfolio.
How does this impact the end user?
Through more rigid pricing, fewer promotions, base models with less memory than expected, or irregular availability during launches.