The global smartphone market has recorded one of its weakest quarters in more than a decade, and the reason is increasingly clear. Rising DRAM and NAND prices, driven by memory manufacturers diverting production capacity towards AI data centres, have increased smartphone production costs at a time when consumers are becoming more price-sensitive.
Two companies, however, emerged stronger from the quarter.
According to Counterpoint Research, global smartphone shipments fell 11 per cent year-on-year in the second quarter of calendar year 2026 (Q2 CY2026), marking the weakest second-quarter performance since 2013. Omdia estimated a smaller decline of 4 per cent.
While neither firms gave an absolute shipment figure, market tracker International Data Corporation (IDC) pegged Q2 CY2026 shipments at 277.5 million units, a 6.7 per cent year-on-year decline.
All three research firms, however, reached the same conclusion: Apple and Samsung gained market share while most competitors lost ground.
Samsung reclaimed the top position globally with a 24 per cent market share in Counterpoint's data and 22 per cent in Omdia's estimates, recording the strongest growth among the top five smartphone brands.
Apple's shipments increased 3 per cent year-on-year, lifting its market share to a record 20 per cent for a second quarter. Omdia described it as the company's strongest second-quarter performance on record.
By contrast, Xiaomi, OPPO and Vivo all posted double-digit year-on-year shipment declines and lost market share.
The reasons become clearer when viewed through the lens of the ongoing memory shortage.
Why memory costs are hurting budget smartphone makers
According to Omdia principal analyst Runar Bjørhovde, memory and storage now account for more than 60 per cent of the bill of materials for budget smartphones and more than 30 per cent for premium devices. Some manufacturers are paying four to five times more than they did a year ago for the same components.
Omdia separately estimates that memory accounts for about 64 per cent of manufacturing costs for smartphones priced below $100.
For devices priced between $100 and $400, memory can represent as much as 59 per cent of the bill of materials. That falls to around 28 per cent for smartphones priced between $600 and $800 and to just over one-quarter for devices priced above $800.
This cost structure explains the widening divide.
Manufacturers whose sales are concentrated below the $400 price point have limited flexibility. They must either increase retail prices or accept lower margins.
Xiaomi, OPPO and Vivo remain heavily exposed to that segment.
Apple has no presence there. Samsung competes across price bands, but benefits from another advantage: supply assurance.
Earlier this year, Navkendar Singh, associate vice-president at IDC India, said Apple and Samsung's influence with memory suppliers stems less from negotiating lower prices and more from securing reliable component supply.
Because of their purchasing scale, both companies occupy a different position in suppliers' allocation priorities than smaller original equipment manufacturers (OEMs), although the precise commercial advantage is difficult to quantify.
Apple's pricing strategy has been selective
Counterpoint noted that Apple was the only major smartphone manufacturer to avoid increasing handset prices during the quarter.
That decision helped sustain demand for the iPhone 17 in key markets even as Xiaomi, OPPO and Vivo repeatedly adjusted prices.
Apple's restraint, however, has not extended across its broader hardware portfolio.
On June 25, the company increased prices of iPads, Macs, MacBooks and home products after Chief Executive Officer Tim Cook told The Wall Street Journal that higher component costs had become unsustainable.
In India, the entry-level iPad price increased from Rs 34,990 to Rs 49,990, while some high-end MacBook Pro configurations became as much as Rs 100,000 more expensive.
Notably, iPhone prices remained unchanged.
The move suggests Apple is protecting its most strategically important product line ahead of the next launch cycle.
Analysts, including Singh, expect Apple to incorporate price increases of about $100 to $150 across the next iPhone generation expected later this year.
Samsung has adopted a similar strategy, although through a different product mix.
Its price increases have been more visible in budget Galaxy F-series and M-series devices than in flagship Galaxy S-series and Galaxy Z-series models.
The approach mirrors Apple's broader strategy: protect flagship products that reinforce premium brand positioning while recovering higher component costs through lower-priced models.
Xiaomi, OPPO and Vivo have fewer options
For Xiaomi, OPPO and Vivo, replicating that strategy is considerably more difficult because premium smartphones account for a much smaller share of overall shipments.
Omdia's Q1 CY2026 analysis found that more than half of Xiaomi's global shipments fall below the $200 price segment, precisely where memory cost inflation has had the greatest impact.
Counterpoint senior analyst Shilpi Jain said entry-level and mid-range smartphones, which account for most global shipments, have become structurally difficult to sustain at previous price levels.
Manufacturers are responding in different ways.
Some are accepting lower margins. Others are extending the life cycle of existing products. Some are reducing the pace of new product launches altogether.
Counterpoint's full-year forecast illustrates the divergence.
The research firm expects Xiaomi's smartphone shipments to decline 28 per cent in 2026, compared with a projected 4 per cent decline for Samsung, while Apple is expected to remain broadly flat.
Premium smartphones are becoming more important
The industry response increasingly appears structural rather than temporary.
Omdia analyst Le Xuan Chiew said vendors' tactical adjustments should not be viewed as short-term reactions but as longer-term changes that will shape competitiveness and sustainability for years.
The underlying strategy is straightforward: sell fewer devices at higher prices rather than pursue volumes that current memory economics no longer support.
IDC's Q1 CY2026 tracker reflects that trend.
Industry-wide average selling prices reached a record $550 during the quarter, up $100 year-on-year, as manufacturers deliberately reduced their presence in lower-priced segments to protect margins.
Kiranjeet Kaur, associate director for Consumer Devices at IDC, said Apple and Samsung's strength in the premium segment allowed them to limit price increases, while Xiaomi, OPPO and Vivo were forced to accelerate their move towards higher-priced smartphones simply to maintain profitability.
That strategy was reflected in second-quarter performance.
Omdia attributed Samsung's growth largely to strong demand for the Galaxy S26 Ultra, driven by its privacy display and AI features.
Apple's growth, meanwhile, came from what Omdia described as one of the strongest iPhone refresh cycles in the company's history, centred on the iPhone 17 series maintaining its pricing rather than relying on older-generation devices to drive volume.
Financing trends are reinforcing the same shift.
A separate TechArc study found that consumers who have previously purchased smartphones through equated monthly instalments (EMIs) are significantly more likely to do so again, making premium devices more accessible even as retail prices continue to rise.
 "Apple, Samsung pull ahead as memory crisis hits smartphone market in Q2")
