Smartphone Market Faces Most Severe Annual Decline, Shipments May Drop by 13.9%
Alina Collins
Counterpoint Research expects global smartphone shipments to fall 13.9% to 1.08 billion units this year — the steepest annual decline ever recorded — as the Iran war deepens a chip-supply crunch that is squeezing low-end handsets hardest.
Why was the forecast cut again?
Counterpoint now projects a 13.9% full-year shipment decline, down from the 12.4% it forecast in February.
This means → conditions are still deteriorating; the estimate was slashed another 1.5 percentage points in just two months.
The driver is an escalating Iran war that has pushed global chip supply from "tight" to "short."
Prices up and volumes down at the same time — what does that signal?
In Q1, global smartphone wholesale prices rose 14% while shipments fell 3.1% year-on-year.
In plain terms = phones cost more but fewer are selling — a textbook supply-shock pattern.
Pre-war inventories are being drawn down; once depleted, price hikes and shortages will intensify.
Why are low-end phones hit the hardest?
Chipmakers are shifting capacity toward higher-margin AI-related chips, squeezing the production allocated to entry-level handset silicon.
This means → manufacturing costs for budget phones are rising, but their price ceiling is low — margins are being crushed to the point of unviability.
Some models priced below $150 may vanish from the market entirely — not because demand dried up, but because they can no longer be made profitably.
What are mid- and low-end makers actually facing?
Counterpoint chief analyst Wang Yang says budget makers are caught between rising costs and limited consumer purchasing power.
In plain terms = costs push up, prices can't follow — the question is no longer "how to sell more" but "whether to stay in the market at all."
Memory-chip shortages are the most severe supply-side disruption; manufacturers cannot offset the impact through price increases or product adjustments.
The question is no longer how to grow shipments or market share — it is whether to remain in the market at all.
Wang Yang
Chief Analyst, Counterpoint Research
Why is the premium segment holding up?
Apple is expected to ship flat in 2026 and grow 5% next year; Q1 revenue hit a record, driven by upgrades to the iPhone 17 series.
Samsung held Q1 shipments steady and is forecast to decline only 4% for the full year — steadier supply and stronger product-line continuity.
This reflects the stronger supply-chain bargaining power and user loyalty that premium brands command, shielding them from the worst of the supply shock.
Which makers face the steepest drops?
Transsion is projected to see shipments fall 32% this year — the highest exposure to low-price models, the most direct hit.
Xiaomi is expected to decline 28%; Honor is expected to decline 20%.
This means → the more a brand depends on the low end, the more share it loses in this supply crisis; the competitive landscape is being reshuffled.
Content is for reference only, not financial advice.