Global smartphone shipments have taken a sharp dive, falling 20% year‑over‑year to the weakest third‑quarter level since 2012, according to preliminary estimates from Counterpoint Research released on Monday. The decline reflects a perfect storm of rising memory‑chip costs, supply constraints, and manufacturers’ strategic shift toward profitability over sheer volume.
Memory‑chip shortage drives up costs
AI‑driven data‑center projects have been hoarding high‑bandwidth memory components, pushing up prices for the DRAM and NAND chips that power modern smartphones. Counterpoint senior analyst Shilpi Jain noted that the surge in memory‑chip costs has forced device makers to raise retail prices, trim shipment volumes, and prioritize higher‑margin models.
Consumer behavior shifts
Jain also highlighted a change in consumer habits: “Consumers are holding on to their devices longer than estimated, increasingly considering refurbished devices and prioritizing higher‑value devices.” This trend further compresses demand for entry‑level phones, amplifying the impact of higher component prices.
Brand performance in the quarter
Despite the overall market contraction, Samsung retained its leading position with a 23% share of global shipments, helped by strong demand for its Galaxy Z Fold8 series and relatively stable component supplies for its mid‑range lineup. Samsung’s shipments fell only 3% from a year earlier.
Apple’s share rose to 22%, crossing the 20% threshold for the first time in a third quarter, even though its shipment volume also declined year‑over‑year. The dip is partly attributed to the absence of a base iPhone 18 model, resulting in a smaller launch‑month channel fill compared with the full iPhone 17 lineup a year earlier.
Chinese manufacturers faced steeper challenges. OPPO and Vivo each recorded shipment declines of more than 20%, while Xiaomi saw a drop of over 30%, shrinking its market share to 10%. Xiaomi’s strategy to pull back from lower‑priced devices and certain overseas markets was aimed at protecting margins amid the cost squeeze.
Implications for the industry
The sharp contraction underscores the vulnerability of the smartphone ecosystem to component‑level disruptions. With memory‑chip pricing likely to remain elevated as AI infrastructure expands, manufacturers may continue to favor premium, higher‑margin devices and explore refurbished‑phone markets to sustain sales.
Analysts suggest that the current environment could accelerate a longer‑term shift toward more durable, upgrade‑friendly phones, as consumers become more reluctant to replace devices frequently. Companies that can secure stable component supplies or diversify their sourcing may gain a competitive edge as the market stabilizes.
Looking ahead
Counterpoint expects the memory‑chip shortage to ease later in the year as new production capacity comes online, but warns that price pressures could linger if AI‑related demand continues to outpace supply. Smartphone makers are closely monitoring the situation, balancing the need to maintain profitability with the desire to keep devices affordable for a broad consumer base.
For now, the industry faces a pivotal quarter that will shape product strategies, pricing models, and supply‑chain decisions well into 2027.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
