Surging memory chip costs and AI-driven component shortages force vendors to hike retail prices and constrain volumes.
Global smartphone shipments plummeted 20 per cent year-on-year during the third quarter, reaching their lowest Q3 level since 2012, according to preliminary estimates from Counterpoint Research. The sharp contraction stems from soaring memory component costs and severe supply shortages, as semiconductor production is increasingly diverted toward artificial intelligence infrastructure projects.
Faced with rising bill-of-materials costs, handset manufacturers have been forced to elevate retail prices, pare back inventory shipments, and prioritise unit profitability over market volume. Counterpoint Senior Analyst Shilpi Jain noted that consumers are retaining their existing devices for longer, turning toward refurbished options, or upgrading selectively to higher-value premium models.
Despite a 3 per cent decline in shipments, Samsung maintained its market leadership with a 23 per cent share, supported by stable component supplies for its mid-range portfolio and strong demand for the Galaxy Z Fold8 series. Apple secured second place with a 22 per cent share—crossing the 20 per cent threshold for the first time in a third quarter—even as its total shipments dipped. Counterpoint attributed Apple’s volume dip to the absence of a base iPhone 18 model, which resulted in a smaller launch-month channel inventory compared to the complete iPhone 17 rollout a year prior.
Chinese vendors faced heavier contractions. OPPO and vivo both recorded shipment declines exceeding 20 per cent. Xiaomi experienced a drop of over 30 per cent, reducing its global market share to 10 per cent as the firm scaled back lower-priced offerings and exited select overseas markets to safeguard profit margins.
Counterpoint expects market conditions to remain difficult through the end of 2026, predicting that manufacturers will continue trimming product portfolios, cutting output, and focusing on high-margin premium devices while price-sensitive consumer segments bear the brunt of component inflation.
