Global smartphone shipments are expected to decline 2.1 percent year on year in 2026 as sharply rising component costs begin to impact consumer demand, according to Counterpoint Research.
The projected 2.1 percent decline represents a 2.6 percentage point downward revision to Counterpoint Research’s earlier 2026 forecast report. The revision in the global smartphone market is driven by weaker outlooks for leading Chinese smartphone makers such as HONOR, OPPO and vivo, which show the largest negative adjustments compared with previous estimates.
Leading smartphone vendors in 2026 will be Apple (19 percent share), Samsung (19 percent share), Xiaomi (14 percent share), Vivo (9 percent share), OPPO (8 percent share), Honor (6 percent share) and Others (26 percent share). All these smartphone brands will report negative growth in 2026.
Low-end smartphone segment under pressure
The impact of rising costs is most pronounced in the low-end smartphone segment, particularly devices priced below $200. Bill of materials costs in this category have increased by 20 percent to 30 percent since the beginning of the year, making price increases difficult to absorb in highly price-sensitive markets. In comparison, mid-range and premium smartphones have seen cost increases in the range of 10 percent to 15 percent, Counterpoint Research Director MS Hwang said.
Additional pressure is expected from the memory market. Counterpoint Research’s analysis of memory solutions for generative AI indicates that memory prices could rise by another 40 percent through the second quarter of 2026. This would push overall bill of materials costs up by roughly 8 percent to more than 15 percent above current elevated levels.
A recent TrendForce report highlighted that memory is taking up a growing share of bill of materials costs in smartphones. Even Apple, despite its strong profitability, is expected to see a notable increase in the memory portion of the iPhone bill of materials in the first quarter of 2026, which could prompt a reassessment of pricing strategies for new models and limit price reductions on older devices.
For Android smartphone brands focused on the mid- to low-end segments, where memory capacity is both a key selling point and a major cost component, rising memory prices are likely to drive higher launch prices for new models in 2026. These vendors may also need to adjust the pricing and lifecycle management of existing models to reduce margin pressure and avoid losses.
Portfolio rationalization and higher ASPs
As passing on higher costs to consumers becomes increasingly challenging at the low end, smartphone manufacturers are beginning to rationalize their portfolios. Volumes of low-end SKUs are already being reduced as OEMs focus on fewer, more viable models.
As a result of cost pass-through and portfolio restructuring, average selling prices are now expected to rise by 6.9 percent in 2026. This is a significant upward revision from the earlier forecast of 3.9 percent released in September 2025.
Market leaders better positioned
Smartphone vendors with greater scale, broad product portfolios and strong exposure to the high-end segment are better positioned to manage supply shortages and margin pressure. Apple and Samsung are expected to be more resilient over the coming quarters due to their vertical integration and pricing power, while other manufacturers, particularly Chinese OEMs, are likely to face tougher trade-offs between protecting market share and maintaining profitability.
Specification adjustments and design strategies
To mitigate rising costs, smartphone makers are increasingly adjusting product specifications and design strategies. These measures include downgrading components such as camera modules, periscope solutions, displays, audio parts and memory configurations. Other approaches involve reusing older components, streamlining product lineups, encouraging upgrades to higher-specification Pro models and introducing new designs to stimulate replacement demand.
Overall, Counterpoint Research expects 2026 to be a challenging year for the global smartphone market, with sustained cost inflation reshaping shipment volumes, pricing strategies and product portfolios across the industry.
BABURAJAN KIZHAKEDATH