A surge in memory demand at AI data centres is dealing a direct blow to the smartphone market. An analysis has emerged projecting the market will shrink 12.9 percent this year.

TechCrunch reported on Feb. 26 that market researcher IDC forecast smartphone shipments will fall by 114 million units this year to 1.12 billion. That would be the biggest decline in a decade. Average smartphone selling prices are also expected to rise 14 percent to $523.

IDC said, "The memory shortage is not merely a temporary phenomenon but will reshape the market structure itself." It added, "The low-end market will shrink further, and small and mid-sized brands will face pressure to exit." Shipments in the Middle East and Africa are expected to fall by more than 20 percent, while China and the Asia-Pacific region are projected to drop 10.5 percent and 13.1 percent, respectively.

Counterpoint, a consulting firm, also forecast a decline in smartphone shipments last year, but its projection at the time was a 2.6 percent drop. Earlier this year, Nothing CEO Carl Pei (칼 페이) said, "Rising memory module prices will push smartphone prices up by more than 30 percent or lower specifications." He added, "In particular, there is a high possibility that the mid- to low-priced market will shrink by more than 20 percent."