Global smartphone shipments plummeted to their weakest second-quarter performance since 2013, marking the end of nine consecutive quarters of growth. This significant downturn, a 3.1% year-on-year drop, is largely attributed to a severe shortage of memory chips, which has escalated handset prices and dampened consumer demand, according to a Counterpoint Research report.
Market Downturn and Supply Chain Pressure
The tech industry is grappling with mounting cost pressures as memory manufacturers increasingly prioritize AI data center clients over consumer electronics companies. This strategic shift has driven up component costs across the smartphone sector, with a particularly harsh impact on entry-level and mid-range devices. Prices for mobile LPDDR4 and LPDDR5 memory in Q2 2026 are projected to be nearly double their levels from Q4 2025.
Experts anticipate this supply crunch will persist through the second half of 2027, as expanding semiconductor production capacity requires substantial investment and considerable time to implement.
Budget Brands Bear the Brunt
The market slowdown disproportionately affected budget and mid-range smartphone brands. Xiaomi, Oppo, and Vivo, prominent players in these segments, experienced the steepest declines in shipments among the top five global brands. The report highlights that LPDDR4 supply is expected to decrease by over 40% in 2026, as manufacturing facilities reallocate capacity towards high-bandwidth memory (HBM) and server DRAM for AI applications. This makes it increasingly uneconomical to produce entry-level products.
Globally, smartphone wholesale prices saw a 14% increase in Q1, a trend expected to continue as pre-shortage inventory diminishes. Certain sub-$150 price tiers face the risk of being permanently ejected from the market.
Premium Players Show Resilience
In contrast to the broader market decline, premium smartphone brands demonstrated remarkable resilience. Apple's shipments rose by 3%, pushing its global market share to a record 20%. This growth was fueled by consistent demand for its high-end iPhones and stable pricing, even amidst rising component costs. Samsung reclaimed the top spot with a 24% global market share, bolstered by strong sales of its Galaxy S26 series, improved product availability, and fewer price hikes in crucial markets like India and the Middle East.
Companies with integrated supply chains and a focus on premium segments, such as Apple and Samsung, are better positioned to navigate the ongoing disruptions. Analysts suggest Apple could further gain market share due to its stable memory supplies and healthy profit margins, though price adjustments are anticipated in the coming months.
Outlook for Recovery
Counterpoint Research projects a global smartphone shipment decline of approximately 14% for the entire year. A market recovery is tentatively expected in 2028, driven by an improved memory supply, pent-up consumer demand, and future technological advancements like 6G launches and the introduction of AI-native devices.