Global smartphone shipments closed 2025 on a cautiously optimistic note. After a turbulent few years, the market managed low single-digit annual growth, helped by stabilising macroeconomic conditions and a solid holiday quarter. According to Counterpoint Research, shipments grew 3.8% year-on-year in Q4 2025, marking it the strongest festive quarter since 2021. Growth was broad-based across most regions, with the notable exceptions of China and Eastern Europe.
However, that recovery may not last long.
A Sharp Turn in 2026
Counterpoint’s latest Smartphone Market Outlook Tracker projects a steep 12.4% year-on-year decline in 2026, potentially the sharpest annual contraction the industry has ever experienced. Global shipments are expected to dip below 1.1 billion units, levels last seen in 2013, when 4G was still in its early expansion phase.
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Unlike previous downturns driven by weak consumer demand, the projected slump in 2026 is expected to be supply-led. At the centre of the disruption is memory.
Memory Costs Trigger a Supply Shock
Mobile LPDDR4 and LPDDR5 memory prices in Q2 2026 are forecast to be nearly three times higher than in Q3 2025. The squeeze stems from wafer capacity being redirected toward higher-margin AI-focused DRAM and enterprise SSD NAND products. This shift comes after a prolonged period of under-investment following the post-pandemic correction, leaving the mobile segment exposed.
Yang Wang, Principal Analyst at Counterpoint, indicated that the pressure may persist into the second half of 2027, as new fabrication capacity requires several quarters to ramp up. Lower-end smartphones are expected to bear the brunt of the disruption, particularly as LPDDR4 supply tightens faster than earlier anticipated.
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Smartphone makers are already adjusting. Launch timelines are being pushed back, product line-ups are shrinking, and specifications are being recalibrated. Some Android brands reportedly implemented price increases of 10% to 20% as early as January 2026 to offset rising component costs.
Premium Segment More Resilient
The downturn is unlikely to affect all segments equally. While overall shipments may contract sharply, premium smartphones are forecast to post modest single-digit growth. In contrast, the sub-$200 category could see volumes decline by more than 20%.
Industry leaders such as Apple and Samsung Electronics are better positioned to manage the volatility. Their scale, tighter supply chain integration and strong pricing power offer a degree of insulation from component fluctuations. Carrier-backed promotions and demand from higher-income consumers are also expected to support premium sales.
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The impact will be more pronounced in emerging markets. Shipments in the Middle East and Africa are projected to fall 19%, while Latin America and Asia Pacific are each expected to decline by around 14%. OEMs that rely heavily on these regions face mounting cost pressures with limited flexibility to pass on price increases without dampening demand.
Consolidation and Changing Consumer Behaviour
As margins tighten, consolidation across the industry is likely to accelerate. Smaller players may struggle to sustain operations, potentially leading to a more concentrated market structure. Higher average selling prices, leaner product portfolios and longer replacement cycles, stretching beyond four years in many cases, could become the norm.
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At the same time, the second-hand smartphone market is poised to gain traction. Refurbished devices priced under $300 are likely to attract price-sensitive buyers as new handset costs climb.
If the forecast materialises, the next phase of recovery will depend less on consumer confidence and more on how quickly memory suppliers can stabilise production. Until then, 2026 could mark one of the most disruptive resets the smartphone industry has faced in more than a decade.
