Global smartphone sales have experienced a significant downturn, with shipments falling 11% year-over-year in the second quarter, marking the lowest level for this period since 2013, according to Counterpoint Research. The decline is largely attributed to manufacturers passing on increased costs of memory components to consumers, exacerbated by a shift in demand toward artificial intelligence data centers. Notably, Apple has managed to increase its shipments by 3%, remaining the only major manufacturer not to raise prices during this period, thanks in part to the popularity of its iPhone 17 series.
The rising costs of memory components have forced manufacturers to reconsider pricing strategies, particularly for entry and mid-tier devices, which are most sensitive to changes in Bill of Materials (BOM) economics. As geopolitical tensions in the Middle East further inflate prices, combined with broader macroeconomic pressures such as high inflation and low consumer sentiment, the smartphone market faces a challenging landscape. Shilpi Jain, a senior analyst at Counterpoint Research, emphasized that the ongoing memory crisis has become the primary obstacle for the industry, evolving from a component shortage to a full-blown demand issue.
Looking ahead, Counterpoint forecasts a 14% decline in global smartphone shipments for the year, with the memory shortage expected to persist until at least 2027. The diversion of memory components to support large-scale AI systems under long-term supply agreements has disrupted traditional supply chains for consumer electronics. This shift was highlighted at the recent MWC Barcelona 2026, where the memory chip shortage and the integration of AI features into mobile devices dominated discussions. As Apple raises prices on its other products but maintains iPhone pricing, the competitive dynamics within the smartphone market are likely to shift, with implications for both consumer choice and manufacturer strategy.
The rising costs of memory components have forced manufacturers to reconsider pricing strategies, particularly for entry and mid-tier devices, which are most sensitive to changes in Bill of Materials (BOM) economics. As geopolitical tensions in the Middle East further inflate prices, combined with broader macroeconomic pressures such as high inflation and low consumer sentiment, the smartphone market faces a challenging landscape. Shilpi Jain, a senior analyst at Counterpoint Research, emphasized that the ongoing memory crisis has become the primary obstacle for the industry, evolving from a component shortage to a full-blown demand issue.
Looking ahead, Counterpoint forecasts a 14% decline in global smartphone shipments for the year, with the memory shortage expected to persist until at least 2027. The diversion of memory components to support large-scale AI systems under long-term supply agreements has disrupted traditional supply chains for consumer electronics. This shift was highlighted at the recent MWC Barcelona 2026, where the memory chip shortage and the integration of AI features into mobile devices dominated discussions. As Apple raises prices on its other products but maintains iPhone pricing, the competitive dynamics within the smartphone market are likely to shift, with implications for both consumer choice and manufacturer strategy.
Source: PYMNTS
