Smartphone demand is being dragged down by a surge in memory chip prices, with global smartphone shipments hitting the lowest Q2 level in 13 years

AI data centers are seizing storage resources, and the mobile industry is paying the price.

The global smartphone market took a major hit in 2026’s second quarter. According to preliminary data released by Counterpoint Research on July 13, Q2 global smartphone shipments fell 11% year over year, marking the lowest Q2 level since 2013.

The root cause of this downturn points to the same behind-the-scenes culprit: memory chips. DRAM and NAND prices have continued to climb, directly pushing up smartphone material costs. Manufacturers pass the pressure on to consumers, with entry-level and mid-range models hit first.

The market landscape has since split. Samsung reclaimed the global No. 1 spot, Apple’s market share hit a quarterly high, and several other smartphone brands suffered the steepest shipment declines.

Storage crisis: shifting from component issues to a demand crisis

To understand this round of decline, you need to first understand the logic of memory chips.

DRAM and NAND are key components in smartphones, essentially the phone’s “memory” and “storage drive.” Over the past year, demand from AI data centers for memory chips has surged dramatically. Memory suppliers prioritized capacity allocation to data-center customers with higher profits, tightening supply on the consumer electronics side and driving prices upward.

Cost pressure flows down the value chain: manufacturers’ BOM costs rise, forcing them to raise prices of end products—especially concentrated in price-sensitive entry-level and mid-range models. These models, in turn, account for a large share of global smartphone shipments.

Counterpoint senior analyst Shilpi Jain said bluntly: “The global memory crisis has gone beyond all other factors and become the biggest single drag on the smartphone industry. Last year it was still a component problem; now it has evolved into a full-scale demand crisis.”

She also noted that entry-level and mid-range devices are “structurally unfeasible at existing price points.” Faced with this dilemma, manufacturers have responded differently: some choose to raise prices and absorb margin pressure, others extend the life cycle of older models and use promotions to retain budget-constrained buyers, while still others cut back on new product launches and production plans directly.

To make matters worse, Middle East geopolitical tensions have pushed up oil prices and transportation costs, further raising smartphone prices. At the same time, slowing global economic growth, high inflation, and consumer confidence hitting a low point mean the impact is most direct for price-sensitive buyers.

Samsung reclaims the top spot, Apple’s market share reaches a new high

With the overall market falling, the performance of leading brands has shown a clear split.

Samsung reclaimed global No. 1 with a 24% market share, and it also had the fastest year-over-year growth among the top five brands. The ramp-up of the Galaxy S26 series is the main driver, with the Ultra version performing particularly well. Its privacy display and AI features have been well received by the market. Samsung’s performance in India and the Middle East has been relatively steady, thanks to better product availability, fewer price hikes, and active summer promotions. In addition, Samsung’s vertical integration advantages and its expanded AI product line have helped it maintain growth in an environment where entry-level and mid-range demand remains soft.

Apple saw shipments grow 3% year over year, and in Q2 its market share reached 20% for the first time. Notably, Apple was the only major manufacturer in the quarter that did not raise prices for its smartphone products. The iPhone 17 series has continued to sell strongly, keeping it as the highest-shipment model globally. However, this year, iPhone shipments in China are still down year over year.

Counterpoint also noted that Apple expects to raise prices when it releases the next-generation iPhone this fall.

Other manufacturers see clear shipment declines

Multiple smartphone brands recorded double-digit year-over-year shipment drops, the worst among the top five brands.

Meanwhile, Xiaomi maintained its shipment volume by streamlining its product lineup and easing retail financing conditions, ultimately keeping a 12% market share. In the high end, the Redmi Note 15 series, Redmi K90, and Xiaomi 17 series added some incremental growth.

OPPO and vivo ranked fourth and fifth, with market shares of 11% and 8%, respectively.

In addition, Google and Huawei grew against the trend, with Q2 shipments up 16% and 6% year over year, respectively. Google’s growth was driven by the performance of Pixel 10 and 10a in mature markets, while Huawei relied on the Mate 80 series, Nova 15, and the newly released Enjoy 90 series to achieve growth.

Full-year outlook: down 14%, with recovery still far away

Counterpoint is not optimistic about 2026’s full-year outlook.

The firm maintained its forecast that global smartphone shipments will decline by about 14% for the full year, and it expects the global memory shortage to continue through 2027.

Against this backdrop, manufacturers’ strategies are expected to further tilt toward “emphasizing value over shipment volume”: cutting low-profit models, adjusting configurations and storage tiers, and increasing the share of refurbished and prior-generation models to retain buyers with limited budgets. The trend toward premiumization is expected to remain relatively resilient throughout the year, supported by installment payments, ecosystem stickiness, and AI retail experiences.

But Counterpoint’s conclusion is clear and direct: “Until memory supply conditions improve significantly, an overall demand recovery is unlikely to occur.”

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