Smartphone shipments to fall as prices hit record highs

Global smartphone market shifts towards premium devices The global smartphone market is undergoing a major structural transformation, with manufacturers increasingly abandoning low-cost, high-volume strategies in favour of premium devices as rising component costs and geopolitical uncertainty reshape the industry, according to the latest research from Omdia. Omdia’s latest global smartphone forecast predicts that worldwide smartphone shipments will contract by 12.2 per cent year-on-year in 2026, falling to 1.093 billion units. The forecast represents a decline of 152 million units compared with 2025, highlighting the scale of the expected downturn in shipment volumes. Despite the anticipated drop in unit sales, the total value of the global smartphone market is forecast to increase by 6.1 per cent year-on-year in 2026, reflecting a growing emphasis on higher-value products. According to the research firm, this divergence between declining shipment volumes and rising market value is being driven by a dramatic increase in smartphone prices. The global average selling price (ASP) for smartphones is forecast to rise from $467 in 2025 to $565 in 2026. This increase of 21 per cent, equivalent to $98 per device, would mark the highest growth rate and largest dollar-value increase ever recorded for the global smartphone industry. Omdia said the sharp rise in pricing reflects mounting pressure throughout the supply chain. Average prices for DRAM and NAND flash memory increased by more than 80 per cent quarter-on-quarter during the first quarter of 2026. Further increases have already been recorded during the second quarter of 2026. Although memory price growth is expected to slow to single-digit rates during the second half of the year, Omdia said component costs are likely to remain structurally elevated, forcing manufacturers to pass at least part of these costs on to consumers. “The smartphone industry is currently going through a period of significant disruption, as vendors work to manage short-term component cost pressures as effectively as possible,” said Jusy Hong, Senior Research Manager at Omdia. “Some vendors are gaining early-mover advantages by increasing component inventories to minimise the impact of future price hikes,” Hong said. “Once the DRAM and NAND pricing starts to stabilise and plateau at a new level, the market is expected to enter a phase of stabilisation, where the focus will shift back to other strategic priorities,” Hong added. “This transition is expected towards the second half of 2027,” she said. Hong also warned that many industry participants are awaiting a future readjustment phase when component prices begin to decline. “Many industry players will be waiting for the readjustment phase, when component prices start to move downwards,” Hong said. “At this stage, vendors with leaner structures will be better positioned to benefit from price declines, and excess inventory could become a major hurdle,” she added. “The transition to a readjustment phase is currently anticipated in early 2028, driven by expected increases in supply capacity,” Hong continued. “Short-term ease could arrive earlier, depending on how AI datacentre demand develops,” she said. To protect profitability, smartphone manufacturers are increasingly reducing their exposure to entry-level devices while boosting the share of mid-range and premium products within their portfolios. Omdia expects this strategic shift to have varying consequences across different regions. The greatest impact is forecast for Africa, the Middle East and Latin America, where demand is expected to weaken substantially because consumers in those regions remain heavily reliant on lower-cost smartphones and are particularly sensitive to price increases. In contrast, developed markets with a stronger preference for premium smartphones are expected to prove more resilient and experience smaller declines in shipments. The report also found that almost every major smartphone brand, with the exception of Apple, has increased retail prices for its latest-generation products to compensate for rising manufacturing costs. “Vendors are also increasingly relying on wider business models and portfolios to strengthen operational resilience,” said Runar Bjorhovde, Omdia Principal Analyst for smartphones. “Vendors and regions with a high dependence on budget smartphones as their primary customer engagement will be particularly exposed,” Bjorhovde said. “The strongest position will be held by vendors that can capture additional high-value and high-margin streams from each user,” he added. “This will typically include cross-selling other ecosystem devices, upselling services and subscriptions that increase the lifetime user value, and expanding opportunities to monetise the installed base,” Bjorhovde said. Looking further ahead, Omdia expects the market downturn to continue into 2027, although the pace of decline is forecast to slow considerably. Global smartphone shipments are projected to decrease by just 0.9 per cent in 2027, indicating that the market may be approaching a period of stabilisation. However, the company cautioned that even if memory prices begin to ease during 2027, the underlying cost of manufacturing smartphones priced below $100 is expected to remain too high to support meaningful reductions in retail prices. As a result, significant recovery in shipment volumes is not expected until 2028. Omdia believes major smartphone manufacturers will remain highly cautious about expanding their entry-level product ranges even after market conditions improve. The research firm expects the ultra-low-end smartphone segment to gradually move away from leading global brands and become increasingly dominated by smaller local and regional manufacturers.