Smartphone shipments fall as memory costs surge

Global smartphone shipments declined by 4.1 per cent year-on-year to 289.7 million units in the first quarter of 2026, marking the end of a 10-quarter growth streak, according to a report from the International Data Corporation (IDC).

The slowdown comes amid limited memory supply and record-high memory prices, which are increasing pressure on manufacturers and dampening consumer demand.

IDC warned that the first-quarter decline is likely a precursor to further market challenges in 2026, as supply constraints and rising costs continue to weigh on the sector.

“The smartphone market has entered one of its most challenging periods, driven by acute memory supply constraints that are directly impacting both shipments and demand,” said IDC senior research director for worldwide consumer devices Nabila Popal.

“Limited memory availability is forcing shipment reductions, while sharply higher memory prices are pushing up bill-of-materials cost and forcing price hikes by many top brands,” she said.

“In several emerging markets, prices have risen by as much as 40–50 per cent, significantly weighing on demand in price-sensitive regions,” she added.

Popal explained that manufacturers are responding with tighter cost controls, reduced marketing, and despecing strategies, although these measures are also limiting growth potential.

“This calendar year represents a critical inflection point for vendors to reinvent themselves as rising component, energy, and logistics costs due to the recent war in the Middle East compound downside risks on the market outlook and pressure global smartphone demand,” she said.

Despite the downturn, Samsung and Apple remained the only top five companies to record year-on-year growth, benefiting from their strength in the premium segment and stronger relationships with memory suppliers.

Samsung reclaimed the top position in the first quarter, driven by strong demand for its Galaxy S26 Ultra and supported by earlier releases in its mid-range A-Series.

The company recorded a 3.6 per cent increase in shipments compared to the same period last year, aided by consistent pricing strategies.

Apple secured second place, with a 3.3 per cent year-on-year increase in global sales, supported by strong demand for the iPhone 17 series and growth of over 30 per cent in China.

However, Apple’s performance was partly constrained by supply disruptions and reduced channel support in certain markets.

Among Chinese manufacturers, Xiaomi, OPPO, and vivo retained their positions despite facing intense competition and marginal losses in market share.

Xiaomi ranked third despite the sharpest decline among the top five, as it deliberately reduced shipments of older models to avoid significant price increases.

OPPO placed fourth, supported by its integration with realme and stronger performance in China, which helped offset global declines.

vivo held fifth place, narrowing its gap with OPPO through strong performance in China and maintaining leadership in India.

Outside the top five, Honor, Lenovo (Motorola), and Huawei recorded positive growth, with Honor achieving the highest year-on-year increase among the top ten at 24 per cent due to its focus on overseas expansion.

“This was a challenging quarter for all smartphone players as they figure out a balance between profitability and growth and stabilisation within home markets versus overseas expansion amid constrained supplies and price pressure,” said IDC associate director of consumer devices Kiranjeet Kaur.

“Apple and Samsung benefited from their dominance in the premium segment where they strategically held back price increases, while others such as Xiaomi, OPPO, and vivo made concerted efforts to shift share to higher price bands,” she said.

“Their resilience will continue to be tested over the next few quarters as they optimise and streamline their portfolio and respond with agility to market and supply chain changes,” she added.

Kaur also warned that competition in Europe is expected to intensify, while rising prices are eroding the low-end segment in Asia.

“The 4 per cent decline in the market is just a sample of what’s to come as the memory situation intensifies on all fronts,” said IDC research director for mobile phones Anthony Scarsella.

“Developed markets like the US that focus on premium models and with incentives such as trade-in and financing will be less susceptible to the overall impact of price increases,” he said.

“However, emerging markets that focus on sub-200 dollar devices will offer consumers very few options as the growing cost of memory components will represent a larger challenge than what the pandemic delivered over five years ago,” he added.

Despite declining shipments, the market is shifting towards higher average selling prices and premiumisation, as vendors adjust portfolios to offset rising costs.IDC expects this trend to continue even as memory prices are projected to stabilise by the second half of 2027.