AI is minting fortunes in Silicon Valley — and crushing smartphones in the process. Global mobile shipments fell 11% from last year, marking the industry’s weakest quarter in 13 years. As data centers gobble up the world’s memory chip supply, the scramble is sorting the industry's winners from its losers.

• Memory costs have surged ~300% from last year — now accounting for more than 65% of a budget phone’s bill of materials, per IDC.
• As such, Omdia expects shipments for sub-$400 phones to shrink 22% this year — with survivors degrading performance.

Not created equal: Chinese firms like Xiaomi, Oppo, and Vivo bore the brunt of the pullback, exposed by their budget-skewed portfolios. Meanwhile, AppleAAPL

and Samsung grew their shipments in Q2, as their fatter margins cushioned the blow from pricier memory. Apple isn’t immune, though. KeyBanc downgraded the stock to Underweight on Monday, warning pricier iPhones and thinner carrier subsidies could slow Services growth. The broader memory crunch isn’t going anywhere either, with some estimates putting a full resolution as far out as 2030.