Global smartphone market sees record annual decline - Chip crisis worsens, impacted by Iran war
The global smartphone market is heading for its biggest annual contraction ever recorded, with shipments forecast to fall 13.9% this year to 1.08 billion units, Counterpoint Research said, citing a growing shortage of memory chips.
The impact is being felt most acutely in low-end smartphones, as chipmakers are shifting production capacity to artificial intelligence-related chips, making entry-level devices less economical to produce.
Global wholesale smartphone prices rose 14% in the first quarter, while shipments fell 3.1% year-on-year. This trend is expected to continue as inventory builds before the supply shock subsides, with some models priced below $150 potentially disappearing from the market.
"Low- and mid-range smartphone manufacturers are caught between cost increases they cannot afford and consumers with limited purchasing power," Counterpoint said.
The memory chip shortage is the most severe supply disruption the smartphone industry has faced, with manufacturers unable to offset the impact through pricing or product changes.
The premium segment has proven more resilient. Apple posted record revenue for the first three months of the year, helped by customers upgrading to the iPhone 17 series. Counterpoint forecasts show that Apple's shipments for 2026 are expected to remain flat before growing by 5% next year.
With a more stable supply of chips and stronger profit margins than many rivals, Apple is in a good position to gain market share and may face less pressure to raise prices.
Samsung Electronics held volumes steady in the first quarter and is expected to record only a 4% decline in shipments for the year, outperforming the broader market thanks to stable supply.
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