Global Smartphone Shipments Face Record 14% Drop in 2026 Driven by Surging Chip Costs

The global smartphone market is heading for its sharpest annual decline on record as soaring chip and memory costs push up handset prices and force manufacturers to cut lower-margin models and configurations, analysts say.

Shipments are forecast to drop by more than 14 per cent year-on-year to about 1.07 billion units in 2026, mainly due to soaring component costs, consultancy Counterpoint Research said in a report. That figure is substantially below the 1.2 billion shipped in 2023, which at the time was the lowest in almost a decade, spurred by economic uncertainty and high inflation that hit consumer sentiment. Shipments rose 4 per cent to 1.21 billion in 2024, and 3 per cent to 1.25 billion in 2025.

The main culprit for the expected decrease this year is the cost of chipsets and memory units, Hong Kong-based Counterpoint said. Chip prices have soared due to high demand driven by data centres, amid the artificial intelligence boom. This has been passed along the supply chain, limiting options for buyers as prices of new phones increase.

The pressure from higher manufacturing costs points to a pattern that could linger in the longer term, Counterpoint principal analyst Yang Wang said. Higher component costs are pushing manufacturers to remove products and configurations that are no longer economically viable at lower price points.

Apple raised the prices of some of its Macs and iPads in June, and is widely expected to do the same for its next iPhones. Google, Motorola, Nothing, and OnePlus, as well as mid-tier majors Oppo, Realme, Vivo, and Xiaomi, have also announced increases.

Samsung's Galaxy Z Fold8 and Galaxy Z Fold8 Ultra feature slimmer foldable designs, larger displays, and upgraded camera systems. Apple's iPhone 17 Pro Max features the company's latest A-series chip, an upgraded camera system, and a redesigned aluminium enclosure. Apple's iPhone 17 Air features a lightweight design and a large display. OnePlus has expanded its smartphone range with the OnePlus 15 and 15R. Oppo's Find X9 features a Hasselblad-branded camera system.

Charu Chanana, chief investment strategist of Saxo Bank, noted that higher memory and storage costs, alongside tariffs, currencies, and increasingly sophisticated components, suggest price hikes could continue. Premium manufacturers with strong brands can pass on more of the cost, while mass-market producers may reduce storage, delay launches, or accept weaker margins.

Samsung Electronics raised the prices of its new-generation Galaxy Z foldables. Seoul-based Samsung is on pace to reclaim the lead in smartphone shipments this year, with its share pegged to rise 0.8 per cent to 22.6 per cent, edging out Apple by 0.1 per cent, according to Counterpoint. The top six Chinese mobile phone makers—Huawei Technologies, Honor, Oppo Group, Transsion Group, Vivo, and Xiaomi—are forecast to comprise 45.4 per cent of the market this year.

Counterpoint expects the smartphone market to remain under pressure in 2027 before rebounding more strongly in 2028, as high-cost inventory must first move through the channel and AI demand remains elevated.