Gartner projects worldwide PC shipments to fall 10.4% and smartphone shipments to drop 8.4% in 2026 compared to 2025, marking the lowest device volumes in over a decade due to a 130% surge in DRAM and solid-state drive prices. This escalation will raise PC prices by 17% and smartphone prices by 13%, concentrating demand on premium segments while eroding affordability for entry-level buyers. Memory costs are expected to peak at 23% of PC bill-of-materials, up from 16% in 2025, eliminating vendors’ margin buffers and forcing strategic repricing.
For enterprise procurement leaders, this signals prolonged device refresh cycles, with business PC lifetimes extending 15% and consumer devices by 20%, heightening exposure to security vulnerabilities on ageing hardware. In India, where PC penetration lags advanced markets and budget laptops dominate SMB and education segments, the price shock could widen the digital divide, delaying AI PC adoption and cloud migration for cost-constrained organisations.
Entry-level segments face structural contraction
The sub-500 dollar entry-level PC market will become non-viable and disappear by 2028, as vendors can no longer absorb memory inflation on low-margin products. AI PC penetration, projected at 50% by some forecasts, will slow until 2028 due to elevated pricing, shifting focus to high-end enterprise and consumer devices. Basic smartphones will suffer most, with buyers five times more likely to exit the market than premium users, turning to refurbished or second-hand options.
This bifurcation forces IT strategists to rethink endpoint strategies, prioritising thin clients, VDI and device-as-a-service models to mitigate capex pressures while maintaining productivity. Indian enterprises, reliant on affordable hardware for hybrid workforces, may accelerate Chromebook and ARM-based deployments, but overall shipments contraction risks stalling digital transformation in SMEs.
Vendor profitability and pricing windows
PC vendors face a critical pricing window in early 2026 to optimise margins before inflation compresses profitability from Q2 onward, necessitating acceptance of lower volumes over margin erosion. Gartner advises protecting premium segments while preparing for fundamental shifts in upgrade cycles driven by sustained component pressures. Smartphone margins offer some resilience in high-end tiers, but entry-level erosion will accelerate market consolidation.
For supply chain managers, this underscores the need for diversified sourcing and hedging against memory volatility, particularly as AI data centre demand competes for the same DRAM pools. In India’s manufacturing push under PLI schemes, local assembly may buffer some import duties but cannot offset global pricing tides without scale efficiencies.
Enterprise adaptation strategies amid contraction
Rising costs amplify risks of managing legacy fleets, demanding enhanced endpoint security, remote management and lifecycle extension tools. Decision-makers should model scenarios for 15-20% lifespan extensions, investing in software-defined perimeters and zero-trust to secure older assets. The memory crunch also delays AI-infused endpoints, pushing reliance on server-side inference for near-term productivity gains.
In policy terms, India’s incentives for electronics manufacturing gain urgency, as shipment declines could undermine export targets and domestic value addition goals. Enterprises must pivot to outcome-based procurement, favouring leasing and subscription models that align with volatile hardware economics.
