Global Smartphone Shipments to Plunge in 2026, Marking Steepest Decline on Record
The global smartphone market is bracing for its sharpest annual contraction ever recorded, as escalating chip and memory costs drive up handset prices and force manufacturers to prune lower-margin models, according to a report from Counterpoint Research. The consultancy forecasts that shipments will drop by more than 14% year-on-year to approximately 1.07 billion units in 2026.
This projected figure falls well short of the 1.2 billion units shipped in 2023, which was then the lowest tally in nearly a decade, depressed by economic uncertainty and high inflation. Shipments had shown signs of recovery, rising 4% to 1.21 billion in 2024 and 3% to 1.25 billion in 2025, but the current downturn is attributed primarily to the soaring cost of chipsets and memory components.
The surge in chip prices stems from robust demand from data centers amid the artificial intelligence boom, a cost that has been transmitted down the supply chain. As consumers resist higher prices, imminent further increases – especially for flagship models – are expected to curtail buyer options, Counterpoint said.
Component Costs Drive Strategic Shifts
Counterpoint principal analyst Wang Yang noted that the 2026 decline reflects more than just a temporary dip in demand. "Higher component costs are pushing manufacturers to remove products and configurations that are no longer economically viable, particularly at lower price points," he said.
The pressure is already evident across the industry. Apple raised prices on some Macs and iPads in June and is widely anticipated to do the same for its next iPhones, expected to be unveiled next month. Meanwhile, Google, Motorola, Nothing, OnePlus, Oppo, Realme, Vivo, and Xiaomi have all announced price increases.
Charu Chanana, chief investment strategist at Saxo Bank, indicated that price hikes could persist over the next several product cycles, driven by elevated memory and storage costs, tariffs, currency fluctuations, and increasingly sophisticated components.
Samsung has also raised prices on its new-generation Galaxy Z foldables, and a regional Samsung executive acknowledged the challenges but said the company is collaborating with operators and retailers to offer flexible payment plans. Apple, for its part, does not comment on market speculation.
Samsung Poised to Reclaim Top Spot
Amid the broader slump, Samsung Electronics is projected to regain the leading position in smartphone shipments in 2026, according to Counterpoint. The South Korean giant is expected to post 0.8% growth, capturing a 22.6% market share – edging out Apple by a slim 0.1% margin.
Wang credited Samsung's resilience to its internal component capabilities, extensive portfolio, and established relationships with operators and retailers. "Samsung's return to the top position comes down to its internal component capabilities, broad portfolio and established operator and retail relationships," he said.
The top six Chinese smartphone makers – Huawei, Honor, Oppo Group, Transsion, Vivo, and Xiaomi – are forecast to collectively hold 45.4% of the market in 2026. However, Chinese manufacturers are expected to bear the brunt of the shipment decline, with brands most exposed to price-sensitive segments potentially seeing drops as high as 34%.
Huawei stands out as an exception, with Counterpoint expecting it to sustain significant growth thanks to its self-developed hardware supply chain, a response to US sanctions. Oppo has begun curtailing its OnePlus brand, which had broken into the US market through aggressive pricing, while Xiaomi, Vivo, and Honor are reorganizing their portfolios and developing more premium models to absorb higher component costs.
Market Outlook: Continued Pressure, Then Recovery
Counterpoint expects the smartphone market to remain under pressure in 2027 before staging a stronger rebound in 2028. However, the road to affordability will be gradual, as Wang noted that "higher-cost inventory must first move through the channel" before prices can ease.
Novel AI features and the widely anticipated foldable iPhone from Apple in 2026 are not seen as likely catalysts for a major upgrade wave, according to the report. Rather, the industry's near-term trajectory will be shaped by supply chain economics and manufacturers' strategic responses to rising input costs.
In the Middle East, Samsung maintained its lead in smartphone shipments during the second quarter, according to a separate report from Omdia, underscoring the company's geographic reach and supply chain depth.