Global Smartphone Market to Contract in 2026 Amid Rising Component Costs, Counterpoint Reports

Global smartphone shipments are expected to shrink by 2.1% in 2026, with all major brands projected to see declines, according to a new forecast from Counterpoint Research. The downturn is being driven largely by rising component and material costs, particularly for chips and memory, which are surging due to growing AI-related demand.

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Low-End Phones Hit Hardest

Counterpoint notes that low-end smartphones will be the most affected. The report highlights that bill of materials (BOM) costs for budget devices have already risen 20–30% in 2025, with memory prices projected to climb another 40% by Q2 2026. Overall, the BOM for smartphones in 2026 could increase 8–15% above already elevated levels, forcing manufacturers to raise retail prices.

As a result, the average selling price (ASP) of smartphones is expected to rise by 6.9% next year, according to Counterpoint.

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Impact Across Brands

While every major brand faces shipment declines, Apple and Samsung are seen as best positioned to weather the downturn, due to strong brand loyalty and premium product lines. Both companies are expected to see a modest shipment decline of around 2%.

In contrast, Chinese OEMs such as Xiaomi, Honor, Oppo, and Vivo face more pressure:

• Honor may see shipments drop by over 3%

• Vivo and Oppo, previously projected to grow, are now expected to post declines as well

Counterpoint emphasizes that brands with less pricing flexibility and heavy reliance on lower-end segments are more vulnerable to the cost surge.

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Industry Outlook

The report underscores a challenging environment for the global smartphone market in 2026. Rising component costs driven by AI and memory demand, coupled with inflationary pressures, are likely to slow overall growth and push up prices for consumers. Analysts expect that companies with strong premium segments and diversified portfolios will outperform smaller or budget-focused brands.