The global smartphone industry is on course for its sharpest annual decline ever, with shipments expected to fall by 13.9 per cent this year to 1.08 billion units, according to new figures released by Counterpoint Research.
The downturn is being driven by an increasingly severe shortage of memory chips.
The latest forecast marks a further downgrade from Counterpoint’s February projection of a 12.4 per cent decline, as disruptions to global chip supplies have intensified amid the ongoing conflict involving Iran.
The shortage is hitting the lower end of the smartphone market particularly hard. Chip manufacturers are increasingly allocating production capacity to artificial intelligence-related semiconductors, reducing the availability of components used in entry-level handsets and making such devices less profitable to manufacture.
During the first quarter of the year, global smartphone wholesale prices rose by 14 per cent, even as shipments declined by 3.1 per cent compared with the same period last year. Analysts expect this trend to persist as inventories accumulated before the supply crunch are gradually exhausted. Some smartphone models priced below US$150 could disappear from the market altogether.
“Manufacturers operating in the low and mid-range segments are being squeezed by rising production costs that they cannot easily pass on to consumers, many of whom have limited spending power,” said Wang Yang, Principal Analyst at Counterpoint.
“The challenge is no longer about increasing shipments or expanding market share. For some companies, it is about determining whether they can continue operating in the market at all.”
Wang described the memory chip shortage as the most serious supply-side disruption the smartphone sector has ever experienced, noting that manufacturers have few options to mitigate the impact through pricing strategies or product adjustments.
The premium smartphone segment has, however, remained comparatively resilient. Apple reported record revenue in the first quarter, supported by strong demand from consumers upgrading to its iPhone 17 range. Counterpoint expects Apple’s shipments to remain broadly unchanged in 2026 before growing by five per cent next year.
Benefiting from a more stable supply of chips and stronger profit margins than many competitors, Apple is well positioned to expand its market share and may face less pressure to increase prices.
Samsung Electronics also maintained stable shipment volumes during the first quarter and is projected to record a modest four per cent decline for the year as a whole. Counterpoint attributed the company’s relative resilience to secure component supplies and a consistent product portfolio.
By contrast, Transsion, which derives much of its business from smartphones priced below US$150, is forecast to experience a 32 per cent drop in shipments this year. Chinese rivals Xiaomi and Honor are also expected to face significant declines, with shipments projected to fall by 28 per cent and 20 per cent respectively.
