Global Smartphone Shipments to Fall 2.1% in 2026 as Chip Costs Surge
Global smartphone shipments are projected to decline by 2.1% next year as rising semiconductor and memory chip costs weigh on demand, according to technology research firm Counterpoint.
The forecast reflects the mounting impact of a worldwide shortage of legacy memory chips, which has disrupted electronics supply chains in recent months. Manufacturers have increasingly prioritised high-end memory components for artificial intelligence (AI) processors, leaving fewer supplies for consumer devices such as smartphones.
Low-End Smartphones Hit Hardest
Counterpoint’s Research Director, M.S. Hwang, said the budget smartphone market—devices priced below $200—has been hit particularly hard. “We are seeing the low end of the market being impacted most severely, with bill-of-materials costs increasing by 20% to 30% since the beginning of the year,” Hwang said.
The report noted that Chinese smartphone makers, including Honor Device and Oppo, face the greatest vulnerability because of their narrow profit margins and heavy exposure to the entry-level segment.
By contrast, global giants Apple and Samsung are better positioned to weather the downturn. “Apple and Samsung are best-positioned to weather the next few quarters,” Counterpoint senior analyst Yang Wang said, citing their stronger supply-chain resilience and pricing flexibility.
AI Boom Driving Memory Shortage
The memory chip crunch has intensified as AI hardware makers ramp up production. Last month, Counterpoint warned that Nvidia’s decision to use smartphone-style memory chips in its AI servers could cause server-memory prices to double by the end of 2026.
Each AI server requires substantially more memory than a smartphone, creating sudden demand that chipmakers are not yet equipped to meet. The shift has diverted supply away from the smartphone sector, raising component costs for phone manufacturers worldwide.
Broader Industry Outlook
Earlier this month, research firm IDC also forecast a slowdown, predicting global smartphone shipments would fall by 0.9% in 2026 due to the same upward pressure on memory prices. Analysts say the combination of rising component costs, soft consumer demand, and slower innovation cycles could continue to weigh on the smartphone industry through the middle of the decade.
Manufacturers are expected to focus on efficiency improvements, premium models, and regional diversification to offset cost pressures until supply conditions stabilise.
with inputs from Reuters