Yes, the global smartphone market is expected to shrink in 2026—but “shrink” mainly means fewer phones shipped, not that people are abandoning smartphones. Forecasts from IDC, Gartner, Omdia and Counterpoint put the decline between roughly 8% and 14%. At the same time, average selling prices may rise as memory shortages, logistics expenses and other component costs make inexpensive phones harder to build profitably.
For households, the practical result could be fewer low-cost choices, slower specification improvements at the same price and stronger value in repairing a current phone, buying a previous-generation flagship or choosing a reputable refurbished device.
What is actually shrinking?
The clearest decline is in global smartphone shipments—devices sold by manufacturers into carriers, retailers and distributors. Shipment data is not identical to completed consumer purchases, and it does not measure the number of active smartphones in use.
- Shipments: New units entering distribution channels.
- Retail sell-through: Phones actually purchased by consumers; timing can differ from shipments.
- Installed base: Phones people continue using. This can remain large while upgrades slow.
- Industry revenue: Total sales value, which can rise if average prices increase despite fewer units.
- Vendor profit: A separate result affected by margins, product mix, subsidies and operating costs.
- Average selling price (ASP): A market average, not a prediction for every model.
Consumers may keep existing phones longer, repair them, buy older models or switch to refurbished devices. A shipment contraction therefore is not a collapse in smartphone ownership.
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How large could the 2026 decline be?
Analysts do not agree on one number. Their estimates changed as memory prices and supply conditions worsened, so the range is more informative than any single forecast.
| Analyst | Forecast timing | 2026 shipment outlook | Qualification |
|---|---|---|---|
| IDC | 2026 update | -13.9%, about 1.09 billion units | Includes the memory crisis and additional logistics and geopolitical costs. IDC forecast |
| Gartner | February 2026 | -8.4% | Centers on surging memory costs and likely substitution toward used devices. Gartner forecast |
| Omdia | June 2026 | -12.2%, about 1.093 billion units | Describes a shift from low-cost volume toward premium value. Omdia forecast |
| Counterpoint | December 2025 | -2.1% | An earlier estimate that was subsequently revised materially lower. Earlier forecast |
| Counterpoint | July 2026 update | Approximately -14% for the full year | Follows an 11% year-over-year Q2 decline; figures are preliminary. Q2 update |
These are forecasts made before the 2026 year was complete. Regional results can differ substantially, particularly between price-sensitive emerging markets and mature markets where carrier financing and trade-ins are common.
Why rising memory costs are driving the downturn
The central mechanism is a squeeze in DRAM and NAND memory:
- AI data-center construction increases demand for high-bandwidth memory and server DRAM.
- Memory manufacturers direct more capacity toward higher-margin AI and server products.
- Consumer DRAM and NAND become tighter and more expensive.
- Phone makers face higher bill-of-materials (BOM) costs.
- Vendors raise prices, accept lower margins, reduce specifications, simplify lineups or cut production.
- Higher effective prices weaken the value proposition and encourage owners to delay upgrades.
Counterpoint’s December 2025 estimate put DRAM-related BOM increases at approximately 25% for low-end phones, 15% for mid-range phones and 10% for high-end phones. It also estimated that BOM costs for sub-$200 phones had risen roughly 20%–30% from the start of that year. Those figures describe component costs, not universal retail-price increases. Counterpoint’s cost analysis
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Counterpoint later said DRAM and NAND shortages had intensified and that Q2 2026 mobile-memory prices were substantially above late-2025 levels. Counterpoint Q2 update
Other costs adding pressure
Memory is central, but it is not the only expense. Displays, camera modules, radio-frequency parts, storage, energy, factory operations, freight, currency movements, tariffs, trade restrictions and weaker consumer confidence all affect the final economics. IDC specifically cited higher energy, logistics and transportation costs, while Omdia pointed to geopolitical uncertainty and broader component inflation.
Phone financing also matters to household budgets. A similar monthly installment can conceal a higher total device cost if the term, required service plan or upgrade fees change.
Why budget phones are most exposed
Low-cost phones have the thinnest margins and the least room to absorb a $10 or $20 component increase. Analysts consistently identify the entry market as the main casualty.
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Most vulnerable price bands
- Below $100 and below $150, where small price changes can remove a product from a buyer’s budget.
- Below $200, the segment IDC expects to contract most sharply.
- The broader $100–$399 mass market, which Omdia identifies as particularly exposed.
Gartner expects some entry-level buyers to keep their current phones longer or move to second-hand devices. Omdia’s earlier 2026 outlook also projected a contraction as memory constraints and geopolitical pressures spread through the supply chain. Omdia analysis
“Configuration shrinkflation” is another possibility: a model may retain its headline price while offering less RAM, storage or camera hardware, or a manufacturer may discontinue marginal models altogether.
How manufacturers are responding
- Passing some component costs through as higher retail prices.
- Reducing promotions or accepting lower margins temporarily.
- Cutting RAM, storage or other specifications in cost-sensitive tiers.
- Reusing older platforms and components.
- Removing low-volume models and keeping older phones in production.
- Allocating scarce memory to flagship products.
- Increasing trade-in, financing and inventory incentives where they protect demand.
- Expanding previous-generation and refurbished offerings.
Counterpoint says larger companies with scale, broad portfolios and greater vertical integration are better positioned to absorb supply shocks. Smaller brands heavily dependent on entry-level volume have fewer ways to protect both affordability and margins. Counterpoint analysis
Why premium phones may hold up better
Premium buyers are generally less sensitive to a component increase, and flagship purchases are often supported by carrier financing, trade-in credits, ecosystem lock-in, longer software support and stronger resale values. Premium devices also generate more margin per unit, making it rational for vendors to prioritize them when memory is scarce.
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Counterpoint’s preliminary Q2 2026 figures showed Apple shipments up 3% year over year, with Apple at 20% share and Samsung at approximately 24% share. These are sell-in shipment figures, not audited retail sales. They indicate resilience at the top of the market, not immunity from weaker demand. Counterpoint Q2 data
This is not simply an “Apple wins, Android loses” story. Premium Android devices can benefit too, while Android brands concentrated in entry and mid-range tiers face greater cost exposure.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Fewer phones can still mean higher industry value
Counterpoint projected global smartphone ASP at approximately $414 in 2026, up from about $370 in 2025. Omdia projected a much higher $565. The difference reflects methodology and market-definition differences; the figures should not be combined as though they were interchangeable. Counterpoint ASP analysis Omdia ASP forecast
Because ASP can rise while units fall, market revenue may be stable or higher even as shipment volume contracts. Revenue can also become more concentrated among premium brands and higher storage tiers.
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What this means for household buying decisions
Buying sooner can make sense when
- Your phone is failing, unsupported, unsafe or needed for work, travel or accessibility.
- A known model has a genuine discount or unusually strong trade-in offer.
- You have compared the full financed cost, required plan and fees—not just the monthly payment.
Repairing or waiting can make sense when
- The phone remains secure and performs adequately.
- A battery replacement costs far less than a replacement device.
- The expected new budget phone offers little improvement.
- You can use a previous-generation flagship or reputable refurbished model.
Refurbished buyers should check battery health, warranty and return terms, carrier compatibility, cosmetic grading and remaining security-update support. Apple Certified Refurbished (Apple), Samsung Certified Re-Newed (Samsung) and marketplaces such as Back Market (Back Market) differ in stock, grading and protections. Repair parts and tools are available from iFixit (iFixit).
Compare trade-in quotes directly: Apple Trade In (Apple), Samsung Trade-In (Samsung) and Google Store trade-in (Google) have device-, condition- and promotion-specific values.
When might the market recover?
The timing depends heavily on memory capacity. Omdia expects memory-price growth could slow in the second half of 2026, but says manufacturing costs may remain structurally elevated. Counterpoint has indicated constraints could persist into 2027. IDC expects conditions to normalize gradually, with a possible shipment rebound in 2028 after another decline in 2027.
A recovery in unit volume would not necessarily restore the old economics of very inexpensive phones. More capacity could ease shortages, while higher baseline costs, longer support commitments and a premium-focused product mix continue to shape prices.
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