Chip Costs Threaten 2026 Smartphone Shipments
- Global smartphone shipments are forecast to decline in 2026 due to rising chip costs.
- Counterpoint Research projects a 2.1% drop, with entry-level devices most affected.
- Analysts warn that AI-driven demand for memory chips could further strain supply chains.
Decline in Shipments
Counterpoint Research expects worldwide smartphone shipments to fall by 2.1% next year. The firm attributes the decline to increasing costs of memory chips, which are impacting overall demand. Supply chains have been disrupted as manufacturers prioritize high-end chips for artificial intelligence applications. This shift has left legacy memory components in short supply, raising costs across the industry.
Lower-priced smartphones, particularly those under $200, face the greatest pressure. Bill-of-materials costs have risen by 20% to 30% since early 2025, squeezing margins for budget devices. Chinese brands such as Honor and Oppo are seen as more vulnerable in this environment. In contrast, Apple and Samsung are better positioned to withstand the challenges, according to Counterpoint analysts.
AI Servers and Memory Demand
Nvidia’s decision to use smartphone-style memory chips in its AI servers is expected to intensify shortages. Each server requires significantly more memory than a handset, creating demand the industry may struggle to meet. Counterpoint warns that server-memory prices could double by late 2026. This development adds further uncertainty to the smartphone market outlook.
IDC also predicts a global decline in smartphone shipments for 2026, though at a slightly lower rate of 0.9%. Both research firms highlight rising memory chip prices as the central issue. Analysts point out that the growing overlap between consumer electronics and AI infrastructure is reshaping supply chains. The convergence of these sectors underscores how advances in artificial intelligence are influencing broader technology markets.
