Global smartphone output set to fall in 2026 amid chip crunch: Researcher

By Vlad Savov 

Global smartphone shipments may decline 2.1 per cent next year as a shortage of memory chips drives up costs and squeezes production, according to industry tracker Counterpoint Research. 

That marks a dramatic reversal from an estimated gain of 3.3 per cent this year, with the influential research firm slashing its projection for 2026 from a previous estimate of marginal 0.45 per cent growth. The average selling price for handsets is set to rise 6.9 per cent globally next year, reflecting a 10 per cent to 25 per cent jump in the overall cost of components, Counterpoint said in a research report Tuesday.

 

The global AI buildout has spurred semiconductor producers this year to prioritize advanced memory for Nvidia Corp. accelerators over more basic products. That in turn has fomented a shortage of the dynamic random access memory that’s indispensable in electronics from laptops and EVs to medical devices and appliances. 

 

In recent months, consumer electronics makers including Xiaomi Corp. have sounded the alarm about potential price increases, while others including Lenovo Group Ltd. have begun stockpiling memory in anticipation of rising costs. Nintendo Co.’s shares have declined most of December as concerns grow about the impact on its flagship Switch 2 console and profitability.

 

With smartphones, Chinese brands like Honor Device Co. and Oppo are seen as more vulnerable because of their lower margins. The memory chip deficit is likely to hurt entry-level smartphones in particular, Counterpoint said.

 

“Apple and Samsung are best-positioned to weather the next few quarters,” Counterpoint senior analyst Yang Wang said. “But it will be tough for others that don’t have as much wiggle room to manage market share versus profit margins. We will see this play out especially with the Chinese OEMs as the year progresses.”

 

The consumer impact could be felt in several ways. One approach will be for companies to push users to more premium models, where the profit impact will be less severe, the research firm said. Other options include reusing old components, downgrading other specifications like cameras, or just selling handsets with less memory, Counterpoint said in its report.