Apple Is Gaining an Unexpected Edge From the AI Boom (Ft. Nabila Popal)

Zaid Admani (0:00)

Welcome back to The Rundown, interview edition. Today, I am talking to Nabila Popal, a senior research director at IDC, which is one of the top firms tracking the global smartphone market. The smartphone industry is having a wild year. IDC expects phone shipments to fall almost 17% this year, the biggest drop on record, mostly because AI data centers are eating up all the memory chips and making phones way more expensive. And yet, somehow Apple is still growing. So in today's conversation, we get into what's happening in the smartphone market, why Apple has been holding up better than the rest of the industry. We also talked about the demand for the iPhone 18 Pro and what to expect for the iPhone Duo. This was a really fun conversation for me. It was fun nerding out about the smartphone market. I think you guys are going to enjoy it too. So let's get into it.

All right guys, today we are talking to Nabila Popal, the Senior Research Director at IDC. Nabila, welcome to The Rundown.

Nabila Popal (0:57)

Hi Zaid, thank you for having me. I'm excited to be here.

Zaid Admani (1:00)

I'm super excited for today's conversation. I'm a gadget nerd and you study smartphones for a living, the smartphone market for a living, which is really cool. So I gotta ask before we really dig into everything, your job is to forecast the industry where things are headed. And right now with AI and memory prices and now foldable phones, is this the most eventful year in a long time? What has it been like right now?

Nabila Popal (1:26)

I'm sure it's probably seeming like, yes, it should be, right? Because there's so much going on, all the things you mentioned, AI, foldables and the memory crisis. Definitely in terms of negativity, we have not seen the memory crisis trumps any other challenge we've had, whether it was from the pandemic or the tariffs or the supply chain disruptions.

But given all the other things I mentioned that span the last five years, things have always been interesting, exciting, and it seems to be like, oh my god, this is going to be a challenging quarter. In the next quarter, we have another massive, whether it's a global event or, there's just so many things, or technology, innovation. So definitely an interesting space to be in, and I'm excited to talk about it, and deep dive into whatever you want to discuss.

Zaid Admani (2:10)

Well, you make a good point. The last 18 months must have been crazy, right? Because the tariff stuff, I remember when that was happening, where there was news of Apple flying in jumbo jets worth of iPhones into the US and all that stuff. So I totally forgot about that. So yeah, it's probably been really fun for your job. So let's talk about the smartphone market right now. I saw that IDC is forecasting global phone shipments to fall around 17 percent this year, which is the steepest annual drop on record.

So is this just because of higher memory prices? Like what's causing a huge drop right now?

Nabila Popal (2:43)

So yeah, absolutely. It is because of the memory prices, but just to put things in perspective, right? So we've been, obviously, we track the overmarket. That's what I do for a living as well. It's not just me, right? My whole team. We have a team of like 80, 100-odd analysts globally. So as well as a very strong supply chain team research in China. So we've been on top of this memory news that has been, didn't make as much of the news until recently, right? But we've been trying to get some since late last year, just to give you a dimension of how rapidly the outlook changed.

Our forecast last November, so end of 25, was showing up minus 1 percent. We're like, okay, this coming, it's probably going to drop the market by 1 percent. By December, we did a scenario analysis of most likely 3 percent drops or change, and then worst case 5 percent.

By February, it went down to, so I'm just trying to show you how rapidly the market and the situation was changing and the memory was becoming a bigger and bigger issue. And we just kept seeing the numbers in the supply chain across all the OEMs, and also memory prices keep on skyrocketing. So that was what was driving the decline. Memory prices increased, I mean, cumulatively now almost 400 percent since last year. But to get to this 400 percent year-on-year increase, like in December, we were looking at like 100 percent increase, like, oh my God, this is going to cause a 1 percent drop or 5 percent drop. Worst case if things don't stabilize, and then it increase another 100 percent sequentially in Q1 of this year, and then another 50 to 60 percent. Obviously, I'm giving you averages. So those are the kind of things that really put the market in a damper, because 370 million devices of the 1.2 billion that was last year, units shipped, are below $250 devices. So with memory prices skyrocketing, that part of the market is essentially right. It's what, 20, 30 percent of the market that's facing existential crisis.