Smartphone market poised for 'sharpest decline on record' in 2026

Expectations for the global smartphone market have taken a turn for the worse, with analysts predicting a record-breaking decline in 2026. A combination of dwindling memory supplies and rising device prices is expected to exacerbate this downturn. The International Data Corporation (IDC) anticipates that the global smartphone market could shrink by as much as 13%, while the PC market may see an 11% contraction. Counterpoint Research has echoed these concerns, forecasting a staggering 12% drop in global smartphone shipments for 2026, marking it as the most significant decline in history. The current year is already on track to witness the lowest annual smartphone shipment volumes since 2013, underscoring the severity of the situation. The challenges are being compounded by technology companies diverting resources towards artificial intelligence (AI) initiatives, which is further straining memory chip supplies. Tarun Pathak, Counterpoint's research director, noted that memory manufacturers are prioritizing AI infrastructure, leaving smartphone vendors at the back of the line when it comes to chip allocations. This shortage has led to price increases for critical components, such as rapid access memory (RAM), which are essential for both consumer electronics and the expansive data centers being developed by AI-focused companies like Amazon and Meta. The impact of this chip shortage has been felt for years, but recent forecasts have consistently underestimated the depth of the crisis. Bryan Ma, vice president of devices research at IDC, lamented that their previous growth predictions for the smartphone and PC markets have had to be revised downward significantly, reflecting the ongoing chip shortages. Despite a temporary uptick in shipments at the end of 2025, a structural downturn appears inevitable, according to Counterpoint. As manufacturers grapple with shrinking profit margins, they may pass these costs onto consumers, which could result in longer replacement cycles and a decline in new users. However, there may be a silver lining, as the secondhand smartphone market is poised for growth as budget-conscious consumers look for alternatives amidst rising prices. Leading manufacturers may shift their focus towards mid- to high-end models, potentially abandoning the lower-end market, where memory costs are a substantial portion of pricing. Larger companies like Apple and Samsung are expected to weather the storm better due to their robust supply chain integration and pricing power. The outlook remains bleak in the near term, with the earliest signs of recovery not anticipated until late 2027, contingent on new memory supply capacities coming online. The IDC is monitoring developments from China’s smaller memory suppliers for any signs of relief, though the immediate future appears challenging. Nonetheless, Pathak remains hopeful, asserting that the smartphone market's resilience will eventually prevail, as consumers will always have a need for phones.