"Industry watchers agree this calendar year will be a tough one for the smartphone industry, following modest growth in 2025 when Omdia says shipments hit 1.25 billion units worldwide. However, rising memory prices due to shortages have started to affect the market, with mounting cost pressures expected to be a defining factor throughout 2026, forcing vendors to focus on pricing discipline, profitability, and operational efficiency."
"All vendors are utilizing mitigating tactics by emphasizing long-term partnerships, for example, utilizing scale to secure capacity, and focusing on their supplier base, said Omdia senior analyst Runar Bjørhovde. The situation is particularly critical for vendors with heavier exposure to entry-level smartphones, which are highly price elastic and where memory and storage costs make up a higher share of the bill of materials."
Smartphone shipments reached 1.25 billion units worldwide in 2025 after modest growth. Rising memory prices and shortages have begun to affect the market and are expected to create mounting cost pressures throughout 2026. Vendors will prioritize pricing discipline, profitability, and operational efficiency and will pursue long-term supplier partnerships and scale to secure capacity. Entry-level and budget smartphone makers are most vulnerable because memory and storage make up a higher share of bill of materials and the segment is highly price elastic. Memory producers reallocating capacity to AI servers and GPUs reduces supply for smartphone components, and prices may rise 6-8 percent, disproportionately affecting the low end; the shortage duration will determine the extent of market contraction.
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