Global Smartphone Market Expected to Shrink in 2026 as Memory Prices Surge
The global smartphone market is expected to face a significant slowdown in 2026 as rising memory prices continue to increase manufacturing costs and pressure profit margins across the industry. According to a revised forecast by Counterpoint Research, global smartphone shipments are now projected to decline next year, reversing earlier expectations of flat or stable growth.
Analysts say the sharp increase in memory prices, particularly RAM, is reshaping the economics of smartphone production. As component costs rise, manufacturers are being forced to rethink pricing strategies, product specifications, and shipment targets, with the impact expected to be felt most strongly by low- and mid-range smartphone brands.
Smartphone Market Outlook Revised for 2026
Counterpoint Research now forecasts that global smartphone shipments will decline by 2.1% in 2026, marking a contraction after several years of uneven recovery following the pandemic-era slump. This revision comes after months of rising memory prices that have exceeded earlier expectations.
Previously, analysts believed the market would remain mostly flat, supported by replacement demand and gradual economic recovery in key regions. However, the continued surge in RAM prices has changed the outlook. Memory prices are expected to rise by as much as 40% through the second quarter of 2026, adding significant cost pressure for smartphone manufacturers worldwide.
The revised forecast reflects growing concerns that higher component costs will limit shipment growth, especially in price-sensitive markets such as South Asia, Southeast Asia, Africa, and parts of Latin America.
Rising Memory Prices Disrupt Smartphone Economics
Memory components, including RAM and storage, are among the most critical and expensive parts of modern smartphones. Over the past year, prices for these components have climbed sharply due to supply constraints, production adjustments by memory manufacturers, and renewed demand from multiple industries.
According to Counterpoint, the bill of materials (BoM) for smartphones has already increased substantially:
- Low-end smartphones now cost around 25% more to produce compared to the start of the year
- Mid-range devices have seen cost increases of approximately 15%
- High-end smartphones are facing around 10% higher component costs
If current trends continue, overall bills of materials could rise by an additional 8% to 15% by mid-2026. These increases are difficult for manufacturers to absorb without raising prices or compromising on hardware.
Impact on Global Smartphone Brands
The rising cost environment is expected to affect nearly all major smartphone brands, though the degree of impact will vary.
Chinese Brands Face Stronger Pressure
Counterpoint’s revised outlook suggests that several Chinese smartphone makers will face sharper shipment declines than previously expected. Brands such as Oppo and vivo, which were earlier forecast to post modest growth in 2026, are now expected to see declines instead.
Xiaomi and Honor are projected to experience even steeper drops in shipments, with Honor facing the largest downward revision among major brands. Analysts say these companies operate in highly competitive segments where price sensitivity is high, leaving little room to pass higher costs on to consumers.
Apple and Samsung Better Positioned
While Apple and Samsung are not immune to rising memory prices, they are expected to weather the impact better than most competitors. According to Counterpoint Senior Analyst Yang Wang, both companies have stronger supply chain control, pricing power, and loyal customer bases.
Their premium-focused portfolios also help reduce exposure, as memory costs account for a smaller percentage of total manufacturing costs in high-end smartphones. This allows Apple and Samsung greater flexibility to balance margins and volumes without significantly harming demand.
Cost Pressures Drive Hardware Downgrades
One of the most noticeable effects of rising component costs is already appearing in smartphone design choices. Manufacturers are increasingly adjusting specifications to keep prices competitive, especially in the mid-range and budget segments.
Senior Analyst Shenghao Bai noted that several brands have begun downgrading hardware in select models to offset rising memory costs. These changes include:
- Use of lower-end camera sensors
- Removal or simplification of periscope zoom systems
- Reduced display quality or refresh rates
- Changes to audio components, such as speakers
- Smaller RAM and storage configurations
While these adjustments help control costs, they may also weaken product appeal and slow upgrade cycles, further contributing to shipment declines.
Higher Smartphone Prices Expected in 2026
In addition to lower shipments, consumers are also likely to face higher smartphone prices next year. Counterpoint has revised its forecast for average selling prices (ASPs) in 2026, now expecting an increase of 6.9%, up from the earlier estimate of 3.9%.
Analysts believe manufacturers will increasingly steer buyers toward higher-end models, where margins are healthier and memory costs represent a smaller share of total expenses. This strategy could further shrink the entry-level and budget smartphone market, particularly in emerging economies.
For consumers, this means fewer affordable options with strong specifications, and higher prices even for devices that offer modest upgrades over previous generations.
Pressure on Emerging Markets
Emerging markets have been a key growth driver for the smartphone industry in recent years. However, rising prices and weaker purchasing power could slow demand in regions such as South Asia, Africa, and Southeast Asia.
In countries where smartphones are often purchased outright rather than through carrier financing, even small price increases can significantly affect buying decisions. Analysts warn that prolonged cost pressure could delay replacement cycles and push more consumers toward the second-hand or refurbished market.
Industry Outlook Beyond 2026
While the short-term outlook for 2026 appears challenging, analysts believe the smartphone market could stabilize once memory prices peak and supply conditions improve. Long-term demand drivers such as 5G adoption, AI-powered features, and ecosystem integration remain intact.
However, the next few quarters are expected to be difficult, particularly for brands with thin margins and limited pricing power. Manufacturers that fail to balance cost control with product competitiveness may lose market share or be forced to scale back expansion plans.
Conclusion – Global Smartphone Market 2026 Memory Prices
The global smartphone market is now expected to shrink in 2026 as rising memory prices push up production costs, disrupt pricing strategies, and reduce shipment volumes. With RAM prices projected to climb further, manufacturers are facing tough choices between raising prices, downgrading hardware, or sacrificing margins.
While premium brands like Apple and Samsung are better positioned to absorb the impact, many Android manufacturers, especially Chinese brands, are likely to feel stronger pressure. For consumers, the trend points toward higher prices and fewer feature-rich budget options in the coming year.
As the industry navigates these challenges, the pace of recovery will largely depend on how quickly component costs stabilize and whether global demand can withstand another period of price inflation.
