Storage prices soar, IDC warns: The PC market may shrink by up to 9% in 2026

On Wednesday, the latest device market outlook released by International Data Corporation (IDC) showed that due to the surge in memory prices, the global PC market may face a contraction of up to 9% by 2026. This pessimistic forecast far exceeds the 2.5% decline projected by the agency in November, marking a sharp deterioration in the industry's outlook.

IDC pointed out that the global memory shortage, which has accelerated since mid-October last year, has exceeded its initial model expectations. In a neutral scenario, PC shipments are expected to decline by 5%, while in a pessimistic scenario, the decline could reach 9%. Although IDC has not officially revised its official forecast, its latest scenario analysis is clearly more pessimistic than a few weeks ago.

The root of this crisis lies in the surge in demand for AI infrastructure. The demand for memory from hyperscale cloud service providers has soared, leading to a shift in DRAM and NAND production from consumer devices to high-margin enterprise components such as high-bandwidth memory and high-density DDR5. IDC emphasized that this is not a typical cyclical fluctuation but rather a strategic reconfiguration of silicon capacity that may last for several years.

For the PC industry, this memory shortage coincides with two critical periods: the end of support for Windows 10 and the promotion of "AI PCs," making the market outlook even more severe.

Price Pressure Transmitted to End Market

As the costs of DRAM and SSDs rise, PC manufacturers have begun to signal widespread price increases. IDC estimates that in a pessimistic scenario, the average selling price of PCs may rise by 6% to 8%, while shipments may decline nearly 9% year-on-year. This forecast has been significantly downgraded from the already negative -2.4% expectation in November.

The smartphone market is also under pressure. Memory accounts for a significant share of material costs in smartphones, especially in mid-range models where profit margins are already thin.

IDC warns that smartphone manufacturers may respond by raising prices, lowering specifications, or both, which will reverse the trend of flagship storage configurations sinking over the past decade. In a pessimistic scenario, the global smartphone market may shrink by 5% in 2026, while the average selling price rises and the replacement cycle extends.

Advantages of Large Manufacturers, Pressure on Small Firms

IDC expects that large OEM manufacturers such as Dell, HP, Lenovo, and ASUS will cope better with this environment due to their scale advantages, inventory leverage, and long-term supply agreements. Regional small brands, white-label assemblers, and DIY system manufacturers face much greater risks, especially in the gaming PC sector where high storage configurations are standard and cost sensitivity is high.

This dynamic may further push market share toward major OEM manufacturers, even as the overall market size shrinks.

AI PC Promotion Faces Cost Dilemma

The memory shortage presents a unique contradiction to the promotion of AI PCs. IDC defines AI PCs as systems equipped with NPUs, but these machines also require more memory. The requirements for Microsoft Copilot+ set a minimum threshold of 16GB, with many high-end designs aiming for 32GB or higher configurations. The problem is that memory is currently the most scarce and expensive component. More complicated is the fact that the marketing promotion of AI PCs has not brought the growth that manufacturers expected. User enthusiasm is limited, and dissatisfaction with the rapid and often forced integration of AI features in Windows 11 is becoming increasingly apparent. Against this backdrop, the high prices of AI PCs seem more like a "tax" on features that many buyers did not ask for.

Historic Recession Risks Emerge

A 9% decline, while not catastrophic, is quite serious. During the global financial crisis in 2009, the PC market fell by 11.9%, marking the largest decline in history at that time. The only worse situation occurred in the post-pandemic period, when the market dropped nearly 15% due to excessive saturation, and the industry has yet to fully recover.

What is even more concerning is that this recession is occurring in what should have been a growth year in 2026. With the end of support for Windows 10 and the wave of AI PCs, the market was expected to experience strong growth.

IDC's conclusion is cautious but clear: the trend that began with the boom in AI infrastructure is reshaping the consumer hardware market in unexpected ways. Memory shortages are tightening supply, driving up prices, and forcing manufacturers to rethink their product roadmaps at the most inopportune times