Global smartphone shipments fell 11% in the second quarter, reaching their lowest point for that period since 2013, according to Counterpoint Research. This decline is largely driven by a persistent shortage of memory chips, which has forced manufacturers to raise retail prices and dampened consumer demand for entry- and mid-level devices.
Market Divergence: Apple’s Premium Strategy vs. Competitor Struggles
While the broader market contracted, Apple bucked the trend by increasing its shipments by 3%. According to Counterpoint Research, this performance pushed Apple’s global market share to a record 20%. The company’s success stems from sustained demand for its premium iPhone lineup and a disciplined pricing strategy.
Did you know?
Memory chip suppliers are currently prioritizing high-margin clients in the AI data center sector over the consumer electronics market, a shift that is directly impacting the availability and cost of smartphone components.
The Impact of Memory Shortages on Device Pricing
The supply chain bottleneck is fundamentally changing how smartphones are priced. Because memory suppliers are focusing on the artificial intelligence sector, manufacturers are facing higher procurement costs. Counterpoint Research reports that these costs are being passed directly to consumers. This trend is most acute for entry- and mid-range devices, which lack the profit margins of flagship models to absorb the price increases.
Other major manufacturers have faced steeper challenges. Xiaomi, Oppo, and Vivo recorded the most significant declines among the top five smartphone makers. Their business models rely more heavily on the entry- and mid-range segments, leaving them more vulnerable to the combination of rising component costs and softening consumer demand.
Samsung’s Recovery and Regional Resilience
Samsung regained the top spot in the global market, capturing a 24% share. The company’s resilience is attributed to strong sales of its Galaxy S26 flagship series and improved product availability. Furthermore, Samsung managed to implement smaller price increases in key growth markets, including India and the Middle East, which helped maintain sales volume compared to competitors who faced sharper price hikes.
Industry Outlook Through 2027
The industry faces a long road to recovery. Counterpoint Research maintains its forecast of a double-digit annual decline in global smartphone shipments for the current year. Perhaps more significantly, the firm indicates that the memory supply shortage is expected to persist until 2027.
Frequently Asked Questions
- Why are smartphone prices increasing?
Prices are rising because memory chip suppliers are prioritizing AI data centers, leading to a shortage of components for phones and higher costs for manufacturers. - How long will the memory chip shortage last?
According to Counterpoint Research, the shortage is expected to continue until 2027. - Which companies have been hit hardest by the decline?
Xiaomi, Oppo, and Vivo have seen the most significant drops in shipments due to their heavy reliance on the entry- and mid-range smartphone markets.
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