Global Smartphone Sales Forecast to Plummet as Chip Crisis Deepens
The global smartphone market is expected to experience its largest annual contraction in history in 2026, with worldwide shipments dropping 13.9% to 1.08 billion units amid worsening global memory chip shortages, according to Counterpoint Research. A June 1, 2026, projection from the firm, cited by The Straits Times, is worse than its February estimate of a 12.4% decline, citing Iran-related supply chain disruptions.
The most severe pressure is on the entry-level smartphone segment. Chip manufacturers are prioritising production for AI-related components, making low-cost device production increasingly uneconomical. In Q1 2026, global wholesale smartphone prices rose 14% year-on-year, while shipments fell 3.1%.
Counterpoint expects the situation to persist, with some models priced below US$150 (approximately Rp2.6 million at an exchange rate of Rp17,835 to the US dollar) at risk of disappearing due to production costs. Wang Yang, Counterpoint’s lead analyst, stated: “Budget and mid-range smartphone manufacturers are caught between unabsorbable cost increases and consumers with limited purchasing power. The question is no longer how to boost shipments or market share, but whether they can survive at all.”
Wang described the current memory chip crisis as the most severe supply disruption the smartphone industry has ever faced, noting producers struggle to mitigate it through price adjustments or product changes.
Amid overall market weakness, the premium segment has shown greater resilience. Apple reported its highest quarterly revenue in the first three months of 2026, driven by strong consumer demand for the iPhone 17 series. Counterpoint forecasts Apple’s 2026 shipments to remain stable before a 5% growth in 2027, citing secure chip supply and stronger margins than competitors, positioning it well to expand market share and withstand price pressures.
Samsung Electronics is projected to see only a 4% shipment decline this year, outperforming the market average due to stable supply and consistent product portfolio. Conversely, budget-focused manufacturers face harsher pressures: Transsion, reliant on sub-$150 smartphones, is expected to suffer a 32% shipment drop in 2026, while Xiaomi and Honor are forecast to decline by 28% and 20% respectively.