“Apple and Samsung are best positioned to weather the next few quarters,” said Yang Wang, a senior analyst at Counterpoint Research. And this is particularly important in 2026, when the world is looking at a contraction of the global smartphone market, and it is not a reflection of consumer sentiment, but a reflection of the rising cost of its raw material, said a report by Counterpoint Research.
The latest market forecast by Counterpoint Research is expecting a decline of 2.1% in the global smartphone share for the coming year, contrary to previous predictions of stagnation or growth. Behind the forthcoming market trend is the current situation in the supply chain, where DRAM and NAND flash prices have reached multi-year highs. This, contrary to the normal market cycle of semiconductor developments, is driven by the historic demand of hyperscale AI data centers for high-performance DRAM. Over the past few years, it can be noticed that the industry leaders Samsung, SK hynix, and Micron have been allocating progressively smaller amounts of their market share to the consumer market mobile DRAM product and increasingly to their server products.
These numbers are quite alarming. Budget smartphones, and even those below $200, are already witnessing an escalation of their bill-of-materials cost by 20-30% since early 2025, and mid-range and high-end smartphones are not too far behind, up 10-15% already in BoM cost, according to Counterpoint. Not to mention that even DRAM prices are set to escalate further by no less than 40% in memory prices for Q2 2026, thereby adding 8-15% to existing high production costs because of AI accelerators that devour huge amounts of DRAM and are supported now by Nvidia server lines using LPDDR similar to what is used in smartphones, with incomprehensibly higher ratios than in smartphone variations.
For the OEMs, it is a mixed bag. While Samsung and Apple have sufficient size, diversity in their supply chain, and market power to be resilient and impact only by 2%, it is not the case with the Chinese players. Honor, Oppo, and Vivo are expected to be challenged in terms of margin pressure and loss of bargaining power. While Honor may see decline in shipment by over 3%, Oppo and Vivo, who were expected to grow, may see a decline. Vulnerability will be accentuated in the market involving J series. “In the lower price bands, steep price increases on smartphones are not sustainable,” said Wang, as most firms have already begun pruning their lower-end SKUs out.
Additionally, rather than dealing with this challenge, companies are resorting to hardware reductions. This was detailed by Counterpoint senior analyst Shenghao Bai, who pointed out that manufacturers are resorting to workarounds involving the reduction of camera modules with reduced functionality, reduction of periscopes for zoom systems, adoption of second-tier displays and audio technology, and DRAM system designs that may reduce to a mere 4GB, or even less, for basic versions.
In a rather interesting twist, manufacturers are also employing previously used technology in previous versions or convincing customers to purchase “Pro” versions, thus generating more revenue. This is hardly surprising, considering that this is not a challenge limited to notebook computers. This is a challenge that all partition computers currently face, with DRAM prices soaring, with manufacturers already working on ways to reduce specifications.
The driving force for this is the ever-increasing role of memory within Bill Of Materials for consumers, states TrendForce. This means, in effect, that even Apple is currently reeling from massive price increases for its iPhone memory during the early part of 2026. Eventually, it is expected that even the flagship and mid-range versions will require minimal DRAM. This, in turn, will end up constraining markets within the backend market of semiconductors, mainly through purchases for building data centers for applications in Artificial Intelligence. This is, of course, only a part within a much broader crisis.
Indeed, analysts for markets contend that, while a degree of pricing stabilization will take place within six months, forecasts actually cover a crisis within DRAM availability stretching into the end of 2027. Additionally, rather interestingly, the average selling price for smartphones is expected to rise by 6.9% on a year-over-year basis in 2026 to reach approximately $465 per unit, lifting industry-wide shipments value to a record-breaker of $578.9 billion. This, of course, is a direct reflection of basic demand, summed up by whether tech-savvy consumers and fans realize it yet: The bottomless demand for memory from Artificial Intelligence is set to upend the entire market for mobile things.
