● Covered by 7 sources · 16 reportsMedium impact3 negative7 neutral
Rising Memory Prices Hit Budget Smartphones Hard, Driving Market Contraction
Key points
- Global smartphone shipments fell 11% in Q2 2026.
- Devices under $400 see a 22% shipment decline.
- Memory costs are up to 64% of budget smartphone costs.
- Apple and Samsung are less affected and could gain market share.
- European smartphone shipments dropped 10% year-over-year in Q2, reaching a three-year low.
- Apple and Samsung each hold 34% of the European shipment share.
- Xiaomi, Oppo, and Honor ended Q2 with 15%, 4%, and 3% European market share respectively.
- Chinese smartphone sales contracted 8.6% year-over-year in the first 30 weeks of 2026.
- Apple held 25% of the European smartphone market in Q2 last year.
- Samsung held 31% of the European smartphone market in Q2 last year.
Global Smartphone Shipment Decline
Global smartphone shipments experienced an 11% year-over-year decline in Q2 2026, reaching their lowest point since 2013 according to various analyses. This decline is attributed largely to a sharp increase in memory prices resulting from heightened demand for DRAM and NAND chips in AI-driven markets.
Impact on Budget Smartphones
Budget smartphones, particularly those priced below $400, are hit hardest. Omdia reports that memory now accounts for a substantial portion of their manufacturing costs, with some devices nearing memory costs up to 64% of their total expense. This shift is causing manufacturers to either raise prices or reduce offerings, resulting in a projected 22% decline in the market segment.
Shifts in Market Dynamics
The pressure from increased memory costs could unexpectedly benefit premium brands. Apple and Samsung have managed to maintain their shipment levels, even as others struggle. Analysts suggest that as budget options thin out, entry-level iPhones might become more attractive to consumers traditionally opting for cheaper Android devices.
Regional Impacts
The memory price surge is inducing changes at the regional level too. In India, the effects have been more significant, with a 10% drop in smartphone shipments, compared to a 2% reduction in China. This reflects varying sensitivities across markets to rising costs.
Updates
- Apple held 25% of the European smartphone market in Q2 last year.
- Samsung held 31% of the European smartphone market in Q2 last year.
- European smartphone shipments dropped 10% year-over-year in Q2, reaching a three-year low.
- Apple and Samsung each hold 34% of the European shipment share.
- Xiaomi, Oppo, and Honor ended Q2 with 15%, 4%, and 3% European market share respectively.
- Chinese smartphone sales contracted 8.6% year-over-year in the first 30 weeks of 2026.
✨ This summary was generated by AI from the outlets' reporting listed below. It is not independently verified and may contain errors — check the original sources. How BrevFeed works →
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How outlets covered it
Apple's smartphone market share in Europe increased to 34% in Q2 2026, matching Samsung, while Android brands like Xiaomi, Oppo, and Honor experienced declines. This shift is attributed to a challenging economic climate, including inflation and the impact of the Iran War, which particularly affected the budget smartphone segment.
Counterpoint Research reports indicate a significant decline in global smartphone sales and shipments across Europe, China, India, and Latin America. Despite the overall market contraction, Apple increased its market share in these regions, driven by sustained demand for its iPhone models.
US smartphone sales decreased by 5% in Q2 2026, primarily due to increased memory costs impacting the low-end segment and smaller manufacturers. This decline is expected to continue as Apple is projected to raise prices for its upcoming iPhone 18 series, potentially affecting overall smartphone average selling prices.
Samsung, SK Hynix, and Micron have reportedly sold their entire 2027 manufacturing capacity for DRAM and HBM to AI companies through long-term purchasing agreements. This development indicates a continued scarcity and rising prices for memory components, impacting consumer hardware and other industries.
Worldwide tablet shipments decreased by 9.9% year-over-year to 35.5 million units in Q2 2026, according to Omdia. Apple's iPad shipments dropped 7.5% but maintained market leadership with a 37.8% share, while Lenovo was the only top-five vendor to experience growth.
Samsung, a major memory chip manufacturer, predicts that the current RAM chip shortage will intensify through 2027 and continue until at least 2028. This extended shortage is driven by high demand from AI labs and is leading to increased component costs and higher prices for consumer electronics.
Global smartphone sales decreased by six percent year-on-year in Q2 2026, totaling 272 million units, due to an ongoing memory crisis and increased component costs. Despite the overall market slump, Apple and Samsung increased their market share, with Apple recording its strongest-ever second quarter.
Samsung's DX division, which includes mobile, posted its first-ever loss of 800 billion won ($544 million) in the second fiscal quarter, despite solid smartphone sales. This loss is attributed to increased component costs, particularly soaring memory prices driven by the AI boom, impacting the profitability of budget phones. The company plans to shift focus to high-value-added products, which may lead to higher smartphone prices across the industry.
Samsung's mobile division recorded its first-ever operating loss in Q2 2026, despite solid smartphone sales, attributing the decline to increased component costs. This financial downturn highlights the broader industry impact of rising RAM prices on even major smartphone manufacturers.
A Counterpoint Research report indicates a 15% decline in global SoC shipments in H1 2026 compared to H1 2025, primarily due to rising memory costs impacting smartphone prices. Despite the overall downturn, Google, Samsung, and UNISOC increased their market share, while MediaTek and Qualcomm experienced significant drops.
Rising memory chip costs due to AI demand have caused a 10% drop in India's smartphone shipments. This has led to increased handset prices and has significantly impacted the price-sensitive market segment in the country.
The global smartphone market shrank 11% year-over-year in Q2 2026, the lowest since 2013. Google Pixel achieved 16% year-over-year growth, attributed to the success of the Pixel 10 and 10a in mature markets.
Smartphone shipments dropped 11% in Q2 2026, the lowest since 2013, attributed to rising DRAM and NAND prices. While companies like Apple and Samsung managed to maintain their shipments, budget devices are disproportionately affected by increased manufacturing costs.
Rising memory costs are driving up prices of mid-to-low-end Android smartphones, which may benefit Apple. With fewer affordable Android options available, consumers may find entry-level iPhones more appealing as alternative choices appear more expensive.
The budget smartphone segment is projected to see a 22% decline in shipments due to rising memory costs. Memory now constitutes up to 64% of the manufacturing costs for lower-tier devices, complicating production further.
Increased RAM pricing is leading to significant changes in the Android smartphone market. Devices priced under $400 are facing a 22% decline in shipments as manufacturers downgrade features to mitigate rising production costs.