Memory chip supply constraints and AI demand shifts drive the steepest annual decline in smartphone shipments on record.
Global smartphone shipments are projected to fall 13.9% in 2026 to 1.08 billion units, marking the largest annual decline ever. The downturn reflects worsening memory chip shortages, exacerbated by geopolitical disruptions and reallocated semiconductor production toward AI applications.
The revised forecast sharpens an earlier estimate of a 12.4% decline. Average wholesale smartphone prices rose 14% in the first quarter, while shipments dropped 3.1% year-over-year. Budget models under $150 face the highest risk of market exit as component scarcity persists.
Manufacturers are prioritizing higher-margin devices, leaving low- and mid-tier segments with dwindling supply and rising costs. Inventory depletion is expected to intensify pricing pressures in the coming months.