The smartphone market is expected to shrink in 2026 due to rising chip, memory costs

According to a new report, the smartphone market as a whole is expected to shrink in 2026 due to the rising costs of components.

Counterpoint Research says that its forecasts for the global smartphone market in 2026 is expecting the entire market to shrink by around 2.1%. Where the firm originally expected some major brands to see a decline in year-over-year shipments, every brand is now expected to see a notable decline.

The report explains that low-end smartphones will be “impacted most severely.”

The stated reason for the decline is due to the rising costs of materials, as chip and memory prices are rising due to AI demands. The report brings out that costs on low-end phones have already risen by “20-30%” since the beginning of this year, with memory prices potentially rising by “another 40% through Q2 2026.” This could lead to the total bill of materials for a new smartphone in 2026 rising by “between 8% and over 15% above current elevated levels,” inevitably meaning devices will get more expensive.

Counterpoint says that it expects “average selling prices (ASPs) to also increase next year by 6.9%.”

It’s further stated that major brands such as Apple and Samsung are “best positioned” to push through the decline, while brands that “don’t have as much wiggle room” such as Chinese OEMs (Xiaomi, Honor, Oppo, etc). Counterpoint estimates that Apple and Samsung could see shipment declines of around 2%, while Honor may fare worse, with a decline of over 3%. Vivo and Oppo, both previously expected to grow in 2026, are also now expected to see declines, the firm says.

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