Smartphone sales projected to decline in 2026 amid rising chip costs

Investing.com -- Global smartphone shipments are projected to fall 2.1% in 2026 as increasing chip costs affect consumer demand, according to a Tuesday report from technology research firm Counterpoint.

Electronics supply chains worldwide have been experiencing shortages of legacy memory chips in recent months. Manufacturers have shifted their focus toward high-end memory chips designed for AI applications, creating supply constraints for other devices.

"What we are seeing now is the low end of the market (below $200) being impacted most severely, with bill-of-materials costs increasing by 20% to 30% since the beginning of the year," said MS Hwang, Research Director at Counterpoint.

The report indicated that Chinese smartphone brands like Honor Device and Oppo face greater vulnerability, particularly in entry-level segments where profit margins are already tight.

"Apple and Samsung are best-positioned to weather the next few quarters," noted Yang Wang, senior analyst at Counterpoint.

Last month, Counterpoint reported that NVDA’s decision to use smartphone-style memory chips in its AI servers could potentially double server-memory prices by late 2026. The research firm explained that AI servers require more memory chips than smartphones, creating a sudden demand surge that the industry is not currently prepared to handle.

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