Global smartphone shipments plunge 22% as AI-driven memory costs rise
Manufacturers shipped around 255 million phones in the third quarter of 2026, with analysts warning that rising component costs are putting affordable models under pressure.
By The Register
Global smartphone shipments suffered a sharp decline in the third quarter of 2026 as soaring memory costs placed increasing pressure on manufacturers, particularly those producing lower-priced devices.
Preliminary figures from market research firm IDC show that 255.3 million smartphones were shipped worldwide between July and September, a 22% fall compared with the same period last year.
A separate assessment by Omdia estimates a 20% annual decline, with shipments of approximately 255 million units.
The downturn comes as demand for memory chips from artificial intelligence infrastructure competes with the requirements of consumer electronics manufacturers, contributing to higher component prices and tighter supplies.
According to IDC, memory costs have increased by approximately 350% over the past year. Although the pace of price increases has begun to slow, manufacturers continue to face substantially higher production costs.
The pressure is particularly acute for companies selling budget smartphones, where there is less room to absorb additional costs without increasing retail prices.
Nabila Popal, IDC’s senior research director for worldwide devices, said the industry had anticipated a significant downturn but warned that conditions could deteriorate further.
IDC’s figures suggest the market has not yet reached its lowest point, with elevated prices for other essential components adding to manufacturers’ difficulties.
Apple and Samsung gain market share
The downturn has also changed the competitive balance between smartphone manufacturers.
Omdia estimates that Samsung and Apple together accounted for approximately 45% of global shipments during the quarter, an increase of around eight percentage points compared with a year earlier.
Their growing combined share comes as rising production costs place greater strain on manufacturers competing in more price-sensitive segments.
The research firm has previously indicated that smartphones priced above $400 could prove more resilient than cheaper alternatives, with some higher-priced categories potentially continuing to grow despite the wider market contraction.
Manufacturers are also adjusting their products to manage costs. Measures identified by Omdia include using less expensive display panels, sensors and radio-frequency components to offset higher memory prices.
Recovery may remain distant
Omdia forecasts that worldwide smartphone shipments will decline by 12% across 2026, followed by a further 6% reduction in 2027.
Runar Bjorhovde, the firm’s principal analyst, told The Register that he did not expect relief from the memory shortage before 2028 at the earliest.
He pointed to the continuing imbalance between demand and supply, with stabilisation in memory prices expected to be an early indication that conditions are improving.
IDC has also warned that a sustained recovery may remain some way off, with higher component costs likely to influence smartphone pricing and product ranges beyond the current year.
Although new flagship releases and seasonal promotions could support sales during the final quarter of 2026, Omdia does not expect them to fully offset the pressure from component shortages.
For consumers, the changes could mean fewer inexpensive models and continued pressure on smartphone prices. However, the research concerns global shipments to distribution channels rather than confirmed changes to UK retail prices.
Both research firms expect manufacturers’ ability to manage costs, pricing and product ranges to play an important role as the industry adjusts to the shortage.