Global smartphone market faces record annual decline

The global smartphone market is on track for its steepest annual contraction in history, with shipments projected to plummet by 13.9% this year to just 1.08 billion units, according to a bleak forecast released by Counterpoint Research on Monday.

The updated figure marks a significant downgrade from the 12.4% decline projected back in February. Analysts attribute the worsening crisis to a severe global shortage of memory chips, a supply chain squeeze heavily exacerbated by ongoing geopolitical volatility and conflict in Iran, News.Az reports, citing Reuters.

The impact of the chip crunch is hitting the budget end of the consumer market the hardest. As semiconductor manufacturers aggressively reallocate their production capacity toward high-margin AI chips, manufacturing entry-level devices has become increasingly uneconomical. Driven by this supply shock, global smartphone wholesale prices jumped 14% in the first quarter of the year even as shipments fell 3.1%. Industry experts warn that as pre-existing component inventories dry up, some smartphone models priced under $150 may disappear from retail shelves entirely.

Mid- and low-tier smartphone manufacturers are currently caught in a vice, facing massive component cost increases they cannot absorb, while targeting a consumer base with rapidly diminishing spending power. According to Counterpoint, the current crisis represents the most severe supply-side disruption the smartphone industry has ever faced.

In stark contrast, the premium segment of the market remains highly resilient. Tech giant Apple posted record revenues for the first three months of the year, bolstered by strong consumer demand for its iPhone 17 upgrades. Backed by stable component supply lines and healthy profit margins, Apple's 2026 shipments are expected to hold flat before growing 5% next year. Similarly, Samsung Electronics managed to keep its shipment volumes steady in the first quarter and is projected to outperform the broader industry with a modest 4% full-year decline.

Meanwhile, brands heavily reliant on budget consumers are bracing for impact. Transsion, which dominates the under-$150 segment, is projected to suffer a devastating 32% collapse in shipments this year. Major Chinese rivals Xiaomi and Honor are facing similar headwinds, with full-year shipments forecasted to slide by 28% and 20% respectively.

News.Az 

By Aysel Mammadzada