Surging memory costs are set to become the biggest headwind for the smartphone industry in 2026, with TrendForce forecasting a sharp decline in global production as brands struggle to balance rising component costs with weakening consumer demand.
Global Smartphone Output Forecast to Fall 10 percent in 2026
TrendForce predicts global smartphone production will drop 10 percent year over year to around 1.135 billion units in 2026. The research firm warns that if memory prices continue to surge, the decline could widen to 15 percent or more under a bear-case scenario.
The slowdown reflects a growing gap between rising smartphone retail prices and consumers’ willingness to upgrade devices, creating a challenging environment for manufacturers across all price tiers.
Memory Prices Triple, Reshaping Smartphone Costs
Memory has emerged as the primary cost driver behind the expected production slowdown. Contract prices for a mainstream 8GB plus 256GB memory configuration in the first quarter of 2026 have jumped nearly 200 percent compared with a year earlier.
This surge has dramatically altered smartphone bill of materials dynamics. Memory, which historically represented 10 to 15 percent of total device cost, now accounts for roughly 30 to 40 percent. As a result, brands are facing intense pressure to raise retail prices, reduce specifications, or adjust product portfolios to protect margins.
Premium Brands Better Positioned to Withstand Cost Pressures
The impact of rising memory costs will vary widely across smartphone brands depending on product mix and regional exposure.
Samsung, the world’s largest smartphone vendor and a major memory supplier, is expected to weather the downturn better than most competitors due to vertical integration. Still, its production volumes are likely to soften amid weaker global demand.
Apple is also relatively well positioned thanks to its premium product focus and customer base that tends to tolerate higher prices. This pricing power is expected to help stabilize Apple’s production compared with the broader market.
Entry-Level Focused Brands Face Greater Risks
Budget and entry-level smartphone makers are expected to face the most severe production cuts. Xiaomi and Transsion, which rely heavily on price-sensitive markets, have limited flexibility to pass rising costs to consumers. If memory prices remain elevated, their 2026 production targets could see significant downward revisions.
Intensifying Competition in China Adds Pressure
Chinese smartphone brands including vivo, OPPO, Xiaomi and Honor are also facing growing competition from Huawei, which is aggressively expanding its HarmonyOS ecosystem.
Huawei’s strong brand loyalty in China, flexible pricing strategies and unique market position could allow the company to maintain or even grow production while competitors struggle. TrendForce expects Huawei to experience the smallest production adjustment under the bear-case scenario.
Structural Demand Shifts Extend the Downturn
While rising memory prices are the immediate trigger for the projected production decline, TrendForce says deeper structural factors are also reshaping the market.
Modern smartphones already meet most users’ daily needs, leading to longer replacement cycles and weaker incentives to upgrade. Even if memory prices stabilize, this shift in consumer behavior is unlikely to reverse quickly.
Outlook: A Challenging Year for Smartphone Makers
The smartphone industry is heading into 2026 facing a combination of rising component costs, intensifying competition and slowing upgrade cycles. Manufacturers will need to rethink pricing, specifications and product strategies to navigate the downturn.
BABURAJAN KIZHAKEDATH