Smartphone Shipments Drop 4% as Memory Chip Crunch Drives Up Prices

Global smartphone shipments declined by four per cent year-on-year in the second quarter of 2026, as rising memory component costs and supply chain disruptions forced manufacturers to increase prices, dampening consumer demand.

According to technology research firm Omdia, the decline marks another challenging quarter for the industry as shortages of DRAM and NAND memory chips continue to inflate production costs, particularly for entry-level and mid-range smartphones where manufacturers have limited room to absorb higher component prices.

Despite the overall market contraction, Apple and Samsung emerged as the biggest winners during the quarter, expanding both shipments and market share while several Android competitors struggled with weaker demand and pricing pressure. Omdia said both companies increased their market share compared with the same period last year, highlighting the resilience of the premium smartphone segment.

According to the technology research and advisory group, “premium smartphone makers have been better positioned to withstand rising manufacturing costs because consumers in the high-end market are generally less sensitive to price increases than buyers in the budget segment”.

The firm further noted, “Samsung and Apple bucked the downward trend, growing shipments and increasing their market share by two and four percentage points compared with the second quarter of 2025, respectively.”

Meanwhile, the industry analysts attribute the downturn largely to soaring memory prices, driven by increased global demand for high-bandwidth memory used in artificial intelligence infrastructure. As memory manufacturers prioritise AI-related products, supplies of conventional smartphone memory have tightened, significantly increasing production costs for handset makers.

Hence, the impact has been most severe in the budget smartphone market. Omdia recently projected that shipments of smartphones priced below $400 could decline by more than 22 per cent this year as manufacturers reduce production or raise prices to protect margins.

The research firm has also forecast that the global average selling price of smartphones will climb to $565 in 2026, up from $467 in 2025, representing a 21 per cent increase and the highest annual rise on record. It said manufacturers are increasingly prioritising profitability over shipment volumes by focusing on premium devices.

While, Market observers believe the market could remain under pressure well into 2027 as memory shortages persist, leaving consumers to contend with fewer affordable smartphone options and higher retail prices across many markets.

The latest Omdia findings reinforce broader industry concerns that supply-side constraints, rather than weakening technology adoption, are driving the current slowdown. Other market research firms, including Counterpoint Research and IDC, have also reported shipment declines linked to rising component costs. 

However, Apple has continued to outperform much of the market due to sustained demand for It’s premium device.