20.1% dip in Q3’26: AI boom threatens PC market; vendors are now afraid of mass production 

Global PC (personal computer) shipments fell by 20.1% year-on-year (YoY) during the third quarter of 2026 to 62.7 million units. Compared to the 78.5 million units recorded a year ago, the significant drop reflects the ongoing market struggles and how the AI boom has threatened PC production. 

IDC’s latest report detailed the current trend. The Q3 shipment dip is the second consecutive decline and a deeper one than the 3.8% drop in Q2. Aside from the diversion of memory chips to AI-enhanced facilities such as data centres and sophisticated models, the current PC supply position is also influenced by continued inventory reduction and production repositioning by vendors. 

It’s one of the lowest Q3s in recent years, as the quarter is known for a seasonal lift, according to the report. But the massive dip in Q3 2026 reflects how the market has struggled with price hikes in 2026. 

Top 5 market leaders are not spared from the dip. HP Inc. had the highest dip in Q3, with 30.9% YoY decline; Lenovo dropped by 22.6% YoY, while Dell Technologies fell by 25%. Also, Apple saw an 11.3% drop, and ASUS faced an 8.6% shipment fall. 

To move ahead and overcome the current dynamics, vendors want to increase inventory to overcome the price hike. While this is an easy decision for suppliers, the major hurdle is buyers. A key part of the report repeatedly mentioned how PC vendors are concerned that high inventory could be met with low demand at elevated prices, with projections that they’ll settle for promotions in the coming months. 

Also read: Global PC shipments fall to 68.2 million units in Q2’26, first drop in over 2 years.

AI boom on PC and smartphone market 

In 2026, specifically, the global AI boom has triggered a major crisis in the PC and smartphone markets, driven by a severe shortage of memory, chip-driven inflation and storage components. 

The market forces, influenced by major chipmakers such as Nvidia, Samsung, SK Hynix, and Micron, have redirected manufacturing capacity toward High-Bandwidth Memory (HBM) and concentrated chips for AI data centres rather than standard consumer DRAM and NAND flash. With this, device prices responded by skyrocketing.

According to industry tracking by IDC, memory activities have driven up device prices by 10% to 23%. In 2026, models like MacBooks, iPads, and Windows laptops have seen prices jump between $100 and $400, with typical budget laptops jumping from $400–$500 to almost $700. 

And the PC shipment ecosystem reacted to these factors. In Q1 2026, global PC shipments were 65.6 million units, a 3.2% YoY growth, mainly fueled by Windows 10 migration. Q2 2026 saw the market fall 4.9% YoY to 68.2 million units, the first drop in two years, attributed to component and memory shortages and escalating geopolitical pressures.

A familiar story exists in the smartphone market, which is entering a new dimension. 

As regards the ongoing market shock, vendors and smartphone makers (OEMs) are allocating limited microchips and memory to higher-margin premium devices rather than entry-level phones. A Counterpoint Research report backed this claim, with shipments of 5G smartphones increasing by 8% YoY across the Middle East and Africa (MEA) in Q2 2026. 

Sub-$100 entry-level smartphones and ultra-cheap budget phones are vanishing because memory now makes up over 60% of their bill of materials. OEMs, with projections fixed on earnings, are now channelling their limited resources toward $200, hitting low-income and emerging markets the hardest. 

When massive production is a risk

PC vendors are currently avoiding mass production and pulling back on volume due to a massive component crisis driven by the AI boom, which has triggered high manufacturing costs, uncertain inventory levels, and falling consumer demand. 

“Channels are now worried about carrying too much inventory into a market where high prices are suppressing demand. That could translate into promotions and some short-term relief for consumers, but we don’t expect pricing anywhere near what it was a year ago. With macro conditions worsening, the risk is that the outlook for the next few quarters gets worse before it gets better,” said Jitesh Ubrani, research director for consumer devices at IDC.

However, prices are expected to remain elevated and well above where they were at the same time last year.

“Prices will remain elevated,” he added, but promotions will be used to boost sales. 

The entire conversation is a headache for vendors. They now have warehouses filled with expensive devices that they cannot easily clear through traditional discounting owing to expensive chip components used during the manufacturing process. Initiating mass production now would either improve or worsen the inventory bottleneck.

Also read: 9 in 10 Nigerians use Android-powered smartphones as of 2025 — report.