Global smartphone shipments ended 2025 with low single digit year-on-year (YoY) growth, supported by improving macroeconomic conditions and healthy demand during the holiday season. However, the market is set for a major reversal in 2026, according to Counterpoint Technology Market Research’s latest Smartphone Market Outlook Tracker, with shipments forecasted to decline by 12.4% YoY, marking the sharpest annual contraction ever.

Counterpoint expects memory shortages, rapid component price inflation, and structural vulnerabilities among lower-end OEMs to not only drag down 2026 numbers but also extend the downturn through 2027, with a recovery expected only in late 2027 as additional memory capacity comes online.

Memory shortages to drive 2026-2027 downturn Global smartphone shipments grew by 3.8% YoY in 4Q 2025, extending the market’s recovery to a fourth consecutive quarter and marking the strongest holiday quarter since 2021, with most regions posting YoY growth except China and Eastern Europe.

Despite this momentum, the industry now faces a structural downturn rather than a typical cyclical correction. Counterpoint forecasts global shipments to fall below 1.1 billion units in 2026, the lowest level since 2013, when the global 4G transition was still accelerating.

The core driver is a rapidly worsening memory supply crunch. Mobile LPDDR4/5 prices in 2Q 2026 are expected to reach nearly three times the levels seen in Q3 2025, reflecting an unprecedented squeeze in supply.

“The impact is expected to continue through H2 2027, as it will take several quarters for memory supply expansion to materialize. Lower-end smartphones are likely to be affected the most, especially as LPDDR4 supply is shrinking faster than expected. OEMs are already responding with launch delays, streamlined portfolios, and specification trade-offs. We have also observed 10% to 20% price increases across some Android OEM portfolios in January 2026,” Principal Analyst Yang Wang said.

The current downturn is being shaped by deep structural imbalances across the memory supply chain, as manufacturers continue diverting wafer capacity toward higher-margin AI-focused DRAM and enterprise SSD NAND. This shift, combined with prolonged under-investment following the post-COVID correction, has created a multi-quarter supply gap for mobile-grade LPDDR4/5, leaving OEMs with limited visibility and tighter allocation than at any point in the past decade. Unlike typical demand-driven cycles, the 2026-2027 contraction is fundamentally supply-side in nature, and any recovery will hinge on the pace of new memory capacity and yields coming online.

Not all parts of the market will be affected equally, and premium segments are expected to remain more resilient than the mass market and likely to grow in single digits, while the sub-$200 price segment is expected to decline by more than 20%. Apple and Samsung are likely to weather the headwinds better due to stronger supply chain integration, higher pricing power, and continued premiumization. While flagship memory supply remains tight, premium device availability is expected to stay relatively stable compared with entry-level and lower-mid products. In addition, higher-income consumers and carrier-led promotions should help cushion the impact of rising device prices in premium segments. Within emerging markets, we expect the Middle East and Africa (MEA), Latin America and Asia Pacific regions to decline by 19%, 14% and 14%, respectively.

In contrast, lower-end OEMs that are heavily exposed to emerging markets will face mounting challenges, such as weakening affordability, sharper component cost increases, and limited ability to pass those costs on to consumers. For many, portfolio rationalization alone will not be enough to counteract the structural pressure created by memory shortages.

Counterpoint expects accelerated market consolidation as a result. Smaller manufacturers may be forced to reassess long-term viability, leading to a more concentrated smartphone industry characterized by slower market share shifts, higher ASP floors, slimmer portfolios, and lengthening replacement cycles to well beyond four years. Besides, we also expect the second-hand smartphone market to grow in 2026 as some of these offerings in the sub-$300 segment will look more attractive to budget-conscious buyers.

By: DocMemory
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