AI Memory Scarcity Dampens Smartphone Growth as Canada Overhauls EV Strategy

By the beginning of 2026, the international mobile device market encountered significant structural bottlenecks. These challenges stem from a massive reallocation of production capacity within the semiconductor sector. Major industry players, including Samsung, SK Hynix, and Micron, are prioritizing the manufacturing of High Bandwidth Memory (HBM) to meet the insatiable demand of artificial intelligence data centers. This strategic pivot has inadvertently squeezed the supply of standard DRAM, which is essential for consumer electronics. Consequently, consumers are seeing higher price tags on smartphones, while sales figures have begun to stagnate, particularly within the entry-level market.

The gravity of the situation was highlighted by Arm CEO Rene Haas, who described these supply constraints as the most severe the industry has witnessed in two decades. Similarly, Samsung’s co-CEO T.M. Roh labeled the current environment as "unprecedented." The financial repercussions are already visible; Qualcomm reported a record-breaking $12.25 billion in revenue for the first quarter of fiscal 2026, yet its stock plummeted by 9% after CEO Cristiano Amon issued a cautious outlook linked to memory scarcity. Arm’s shares also took a 7% hit following comments from CFO Jason Child regarding potential royalty declines. Financial experts from Morningstar and J.P. Morgan do not expect the supply-demand gap to close until 2027. Furthermore, Counterpoint Research anticipates a 7% decline in global shipments of high-end smartphone processors for 2026, with the most significant impact felt by devices priced under $150.

While the tech world grapples with hardware shortages, the Canadian government is preparing for a major transformation of its national automotive framework. On Thursday, February 5, 2026, Prime Minister Mark Carney is expected to announce the repeal of the mandate requiring 20% of vehicle sales to be zero-emission (ZEV) by 2026—a policy previously championed by Minister Melanie Joly. In its place, Ottawa will implement fuel efficiency standards modeled after the European CAFE system, allowing manufacturers to earn and trade credits. This policy reversal follows a comprehensive six-month review initiated in September 2025, largely driven by concerns from provincial leaders and automakers regarding the protectionist trade stance of the United States under President Donald Trump.

To support this new direction, Canada plans to reintroduce direct consumer incentives similar to the former iZEV program, which had previously run out of funding. Under the new scheme, buyers could receive up to 5,000 Canadian dollars for fully electric vehicles and 2,500 Canadian dollars for plug-in hybrids. This shift comes at a critical time for the domestic industry; Canadian vehicle production has plummeted from 2.3 million units in 2016 to just 1.2 million in 2025. Currently, Japanese manufacturers Honda and Toyota account for 77% of local output. In a move reflecting a pragmatic approach to geopolitical tensions, a deal reached in January allowed for the importation of 49,000 Chinese electric vehicles at a reduced tariff of 6.1%, as Ottawa seeks to diversify its trade partnerships.