Global smartphone shipments barely scraped by with single-digit growth in 2025, thanks to improving economic conditions and robust holiday demand. But the party is over. A severe memory supply crisis is poised to trigger the steepest annual decline in years, with shipments projected to plummet 12.4% in 2026.
Counterpoint Research’s latest report paints a grim picture. The fourth quarter of 2025 saw a modest 3.8% year-over-year increase, marking four straight quarters of recovery and the strongest holiday performance since 2021. Growth spanned most regions, excluding China and Eastern Europe.
That momentum, however, masks deeper troubles. Memory shortages, skyrocketing component prices, and vulnerabilities among low-end manufacturers are set to hammer the market. The fallout could linger into 2027, with relief not expected until additional memory capacity comes online late that year.
‘Low-end smartphones will bear the brunt, especially as LPDDR4 memory supply dries up faster than anticipated,’ said Counterpoint Principal Analyst Yang Wang. OEMs are already responding with launch delays, trimmed portfolios, spec downgrades, and price hikes—some Android brands raised prices 10-20% in January 2026.
At the root is a supply chain imbalance. Manufacturers are prioritizing high-margin AI DRAM and enterprise SSD NAND, starving smartphone production. Not all segments will suffer equally: premium models from Apple and Samsung may eke out single-digit gains, buoyed by strong supply chains and pricing power. But sub-$200 devices face a brutal 20%+ drop.
As 2026 unfolds, the industry braces for turbulence. Strategic shifts toward premiumization could reshape market dynamics, but for budget buyers, choices may dwindle amid rising costs.