Smartphone Shipment Forecasted to Drop in 2026 Due to Memory Shortages
Smartphone Market Faces Headwinds in 2026 Due to Soaring Memory Costs
The global smartphone market is bracing for a contraction in 2026, with shipments expected to decline by 2.1% as manufacturers struggle with surging memory prices.
According to a new report by Counterpoint Research, the downward trend is driven primarily by a sharp increase in Bill of Materials (BoM) costs. The research firm has lowered its 2026 shipment forecast by 2.6 percentage points compared to previous estimates, signalling a tougher year ahead for the mobile industry.
Memory Shortages Drive Costs Higher
The core issue lies in the rising cost of memory components. Research Director MS Hwang noted that the low end of the market, specifically devices priced below USD200, is being hit the hardest. BoM costs for this segment have already jumped by 20% to 30% since the beginning of the year.
The impact is not limited to budget devices. Mid-range and high-end segments have also seen cost increases of 10% to 15% due to DRAM price surges. The situation is expected to worsen before it improves, with memory prices projected to rise another 40% through the second quarter of 2026. This could push total material costs up by an additional 8% to 15% above current elevated levels.
Consumers to Face Higher Prices and Fewer Choices
As manufacturers grapple with these expenses, consumers will likely see fewer low-cost options on the shelves. Senior Analyst Yang Wang explained that steep price hikes for budget phones are unsustainable.
Consequently, the average selling price (ASP) of smartphones is forecast to rise. Counterpoint has revised its ASP growth projection for next year to 6.9%, up from the 3.9% predicted in September 2025. This suggests that while fewer phones may be sold, they will be more expensive on average.
Chinese OEMs Most Affected
The report highlights that the impact will be uneven across the industry. Chinese manufacturers, including HONOR, OPPO, and vivo, are facing the most significant downward revisions to their shipment forecasts. These companies often operate with thinner margins compared to industry giants like Apple and Samsung, leaving them less “wiggle room” to absorb cost increases.
Downgrades and “Pro” Pushes
To mitigate these rising costs, smartphone makers are adopting new strategies. Senior Analyst Shenghao Bai observed that some companies are beginning to downgrade specifications on certain models.
Other tactics include reusing older components, streamlining product lines, and aggressively marketing higher-margin “Pro” variants to encourage consumers to upgrade to more expensive devices.
