2026 Smartphone Shipments to Post Worst Annual Decline on Record

The global smartphone market has entered its deepest period of contraction on record, according to Counterpoint Research. The full-year 2026 shipments are now forecast to decline 13.9% YoY to 1.08 billion units, a downward revision from the 12.4% decline projected in February. The trigger is a worsening memory supply crisis that has accelerated sharply in recent weeks, compounded by the outbreak of the Iran conflict.

The 1Q26 smartphone market retreated 3.1%, marking the first decline after nine consecutive quarters of growth. The performance was nonetheless better than expected, as OEMs moved to front-load shipments and clear pre-shock inventory ahead of expected price increases. However, the deterioration since has been sharp. Counterpoint Research indicates that mobile LPDDR4/5 prices in 2Q26 are on track to treble relative to 4Q25 levels, with the squeeze expected to persist through 2H27 given the capital intensity and lead times inherent to semiconductor manufacturing.

The damage is falling disproportionately on lower-end devices. LPDDR4 supply is expected to decline more than 40% in 2026 as fabs reallocate capacity toward AI-driven HBM and server DRAM, making it increasingly uneconomical to supply entry-level products. Globally, smartphone wholesale prices rose 14% in Q1, and the pace will sustain as pre-shock inventory is exhausted. Certain sub-$150 price tiers face effective permanent ejection from the market.

“The memory crisis is the most disruptive supply-side event the smartphone industry has ever faced. Unlike demand-driven slowdowns, such as seen during COVID and 2022-23, the current contraction will not respond to pricing, channel and product planning adjustments. OEMs in the low- and mid-tier are caught between unabsorbable cost increases and consumers with hard affordability ceilings. The narrative around the smartphone market is no longer how to grow shipments or market share, but whether to remain in the market at all,” commented Yang Wang, Principal Analyst at Counterpoint Research.

The premium segment will prove more resilient, with Apple and Samsung best positioned given their integrated supply chains and established premiumization strategies. Apple set a March quarter revenue record in Q1, underpinned by a strong iPhone 17-driven replacement cycle. Counterpoint Research forecasts iPhone shipments to remain broadly flat in 2026, with 5% growth in 2027. Apple is in a prime position to gain market share from rivals due to stable memory supplies and healthy margins, making price hikes less urgent and appealing to consumers.

Samsung volumes held broadly flat in Q1 and are expected to decline only 4% in 2026, significantly outperforming the market due to stable device availability and consistent specifications across its portfolio. Among Chinese OEMs, the picture is sharply polarized. Xiaomi’s 19% Q1 decline was the steepest among the top five, with full-year shipments forecast to fall 28% as the company confronts a fundamental question about economic viability in the entry-level market. Huawei grew 1% in Q1, being one of the only Chinese brands to post growth, as the company deliberately held prices to gain share in the low-to-mid tier. Transsion, among the most exposed OEMs given its sub-$150 concentration, is forecast to decline 32% in 2026.

Counterpoint now treats industry consolidation as a baseline scenario. On the other hand, the secondary and refurbished markets will be among the clearest beneficiaries, with growth forecast at 13% in 2026. A market rebound is anticipated in 2028, supported by supply normalization, pent-up demand, fading geopolitical and inflationary worries, and the next major upgrade wave. The commercial launch of 6G networks in pioneer markets including China, Japan and South Korea by the end of the decade, along with the maturity of AI-native devices, will provide a further catalyst.

“2026 will be the year the smartphone industry’s growth assumptions were permanently repriced. The memory crisis is the proximate cause, but the deeper story is structural, with fewer brands, higher prices, longer replacement cycles, and a market that increasingly rewards supply chain control and ecosystem depth over volume ambition. The brands that emerge strongest will be those that used this crisis to sharpen their portfolios rather than simply survive it,” concluded Wang.