The global smartphone market has just had its worst second quarter in more than a decade. Shipments fell 11% year on year in Q2 2026 to the lowest Q2 level since 2013, according to preliminary estimates from Counterpoint Research. The cause is no longer a supply-chain footnote: the memory shortage has become the single biggest drag on the industry.
Why are smartphone shipments falling so hard?
The industry is being squeezed by a memory shortage that is now hitting demand, not just supply. DRAM and NAND prices kept climbing through Q2 2026 because memory suppliers are prioritising AI data-centre demand over consumer electronics, leaving phone makers either absorbing rising component costs or passing them straight to buyers. Counterpoint senior analyst Shilpi Jain put it bluntly, describing the situation as “a full-blown demand issue” in which entry and mid-tier devices “become structurally unfeasible at previous price points.”
That is the part that matters most for ordinary buyers. Entry- and mid-tier phones account for the bulk of global volumes, and they are the models least able to absorb higher bills of materials without a visible price increase. Counterpoint says brands have responded in different ways: some are raising prices and accepting thinner margins, others are stretching the life of older models with promotions, and a few are simply cutting back on launches. Geopolitical tensions in the Middle East added to oil and shipping costs, further inflating prices during the quarter. This follows a broader pattern in which smartphone prices have been climbing as buyers drift towards premium devices, and the memory crunch has sharpened it. Lenovo has separately warned that elevated DRAM and NAND prices could be the new normal for years, which aligns with Counterpoint’s expectation that the shortage will persist into 2027.
Why did Samsung win a shrinking market?
Samsung reclaimed the global No. 1 spot with a 24% share and the strongest year-on-year growth among the top five brands, largely by not squeezing its customers as hard as its rivals did. Counterpoint singled out India and the Middle East, where Samsung held up relatively well thanks to better product availability, fewer price hikes and aggressive summer promotions. Its Galaxy S26 series ramp-up drove overall growth, with the Ultra variant the standout performer.
For buyers in the region, that is the practical read on this report. When the whole market is raising prices, the brand that raises prices the least and keeps stock on shelves tends to gain share, and Samsung played exactly that game in the Middle East. Apple took the opposite route to a similar result: its shipments grew 3% to a record 20% share, and it was the only major brand to avoid price hikes during the quarter, carried by demand for the iPhone 17 series. That premium resilience is consistent with forecasts that Apple is closing in on the top phone-maker position.
Who got hit hardest?
The brands most exposed to cheaper phones took the biggest hits. Xiaomi, OPPO and vivo each posted double-digit percentage declines in Q2 2026, precisely because their volumes lean on the entry and mid-range tiers where rising memory costs bite hardest. Xiaomi trimmed its portfolio and eased retailer financing to hold a 12% share; OPPO and vivo landed fourth and fifth at 11% and 8% respectively, with vivo hurt as price hikes pushed key models out of their crucial price bands. Beyond the top five, Google and Huawei bucked the trend, growing 16% and 6% on the strength of the Pixel 10 line and the Mate 80 series.
The verdict from Counterpoint is not encouraging for anyone hoping for cheaper phones soon. It expects full-year 2026 shipments to fall around 14%, with brands prioritising value over volume, trimming low-margin models and leaning on refurbished and previous-generation devices. Premium demand should hold up, propped by financing and ecosystem loyalty, but a broad recovery is unlikely until memory supply improves. For price-sensitive buyers, the message is clear: budget phones are the segment where prices are rising, and thinner ranges are most likely to keep showing up through 2027.
Leave a Reply