Global smartphone market to shrink by 14 percent in 2026, companies cutting budget phone production

 Global smartphone market to shrink by 14 percent in 2026, companies cutting budget phone production

The global smartphone market is projected to shrink by 14.3 percent in 2026. Market research firm Counterpoint Research has said that smartphone demand will be affected by a shortage of memory chips, rising component prices and declining consumer purchasing power.

According to Counterpoint's latest Smartphone Market Outlook Tracker, global smartphone shipments will decline by 14.3 percent in 2026. The market decline is expected to continue until 2027. Shipments are expected to decline by another 1.4 percent next year. After that, the market is projected to improve from 2028.

Memory chip shortage is the main problem

The main reason for the decline in the smartphone market is the pressure on the supply chain and the rising cost of components. In particular, the supply of mobile memory has become the biggest challenge, according to Counterpoint's analysis.

With the increasing demand for data centers used for AI, the demand for memory chips has also increased. This has increased pressure on the supply of memory available to the smartphone industry. In addition, the increase in chipset prices has affected the cost of production platforms ranging from premium to midrange and older products.

This is seen to be particularly severe in low-end smartphones. As the cost of components increases, manufacturers may have to increase the price of phones or reduce production of low-margin models.

Samsung tops the list despite a shrinking market

Despite a decline in the overall market, South Korean company Samsung is projected to become the world's largest smartphone manufacturer. According to Counterpoint, Samsung's smartphone shipments may increase by about 0.8 percent in 2026. Even with an overall market decline of 14.3 percent, the company's increased shipments will help Samsung return to the top of the market.

Samsung's strong supply chain, a product portfolio spread across various markets around the world, and a relatively reliable supply of memory and other semiconductors are considered the main reasons for this.

Samsung has already overtaken Apple to reclaim the top spot in the global smartphone market in the second quarter of 2026. From April to June, Samsung’s global market share reached 24 percent, while Apple was in second place with a 20 percent share.

Apple to outperform the market

Despite the market contraction, Counterpoint expects Apple to outperform the industry as a whole. But its shipment growth will be limited due to the relatively high price of the phones and the different schedules for launching new models.

Apple’s smartphone shipments grew 3 percent year-on-year in the second quarter of 2026. The company’s market share reached 20 percent, a record for the second quarter.

Chinese brands to be hit hardest

The market downturn is expected to hit Chinese smartphone manufacturers the hardest. Counterpoint predicts that smartphone shipments of major Chinese brands could fall by 15 to 34 percent in 2026.

The reason for the relatively greater impact on the business of companies like Xiaomi, Oppo and Vivo is their low prices and reliance on emerging markets. Since consumers in such markets are more price-sensitive, an increase in component costs can have an immediate impact on demand.

In contrast, the premium smartphone segment is expected to remain relatively strong. Brand loyalty, availability of installment and financing plans, and new AI-based features in high-priced phones are expected to sustain demand to some extent, Counterpoint analyzes.

Manufacturers to reduce cheaper models

Until memory supplies become easier, smartphone companies are likely to adopt a strategy of preserving profits rather than selling more phones. Counterpoint estimates that strategies such as reducing the number of low-profit models, changing the storage capacity mix, and increasing sales of older-generation phones and refurbished devices may be adopted.

According to Counterpoint, the memory supply problem is likely to persist until 2027. Therefore, the coming year will remain challenging for the smartphone market.

However, in the long term, the market is expected to recover. Counterpoint predicts that the smartphone market will start to recover from 2028 and that the global smartphone market will return to the levels of 2024-2025 by the end of the decade. The upcoming commercial expansion of 6G technology is also expected to create new demand.