New Delhi: Global smartphone shipments are expected to contract sharply in 2026 due to a severe memory supply crunch, despite posting modest growth in 2025, according to a report by Counterpoint Research.

The report said worldwide smartphone shipments grew 3.8 per cent year-on-year in the fourth quarter of 2025, marking the fourth consecutive quarter of recovery and the strongest holiday quarter since 2021. Most regions recorded annual growth, except China and Eastern Europe.

However, the momentum is unlikely to sustain. Counterpoint forecasts a 12.4 per cent year-on-year decline in global smartphone shipments in 2026, which would mark the steepest annual contraction on record.

Memory shortages to extend downturn through 2027

The anticipated decline is being attributed to a supply-driven memory shortage, rising component prices and structural vulnerabilities among lower-end original equipment manufacturers (OEMs).

The report said memory supply constraints, particularly in LPDDR4, are tightening faster than expected. The shortage is likely to impact lower-end smartphones the most, while premium models are expected to remain relatively resilient.

Industry analysts expect the downturn to persist through 2027, with recovery likely only in the latter half of that year as additional memory production capacity comes online.

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OEMs respond with price hikes and launch delays

Smartphone makers have already begun adjusting their strategies. The report noted delays in product launches, streamlined portfolios and specification trade-offs across several Android OEMs.

Price increases of 10 per cent to 20 per cent have been observed across some Android smartphone portfolios in January 2026, reflecting the rising cost of memory and other components.

The broader downturn is being driven by structural shifts in the semiconductor supply chain. Memory manufacturers are increasingly diverting wafer capacity towards higher-margin AI-focused DRAM and enterprise SSD NAND production, tightening availability for consumer electronics.

Premium segment to outperform the mass market

While the mass-market and entry-level segments are expected to face significant pressure, the premium smartphone segment is forecast to grow in single digits. Devices priced below $200 are projected to decline by more than 20 per cent in 2026.

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The report said companies with stronger supply chain integration and pricing power, such as Apple and Samsung, are likely to navigate the headwinds better than smaller OEMs.

The global smartphone market outlook for 2026 signals a challenging year ahead, with supply-side disruptions and component inflation reshaping pricing, product strategy and competitive dynamics across regions.