Memory costs and geopolitical factors to trigger slump in smartphone sales

Share

The global smartphone market is bracing for a significant downturn in 2026, with shipments projected to fall by 7% year-on-year.

According to a new report from Omdia, a combination of soaring memory prices, constrained supply, and escalating geopolitical tensions is creating a perfect storm for manufacturers and consumers alike.

The primary driver behind this slump is the rising cost of memory. Since late 2025, memory has claimed a much larger share of the smartphone “bill of materials,” forcing vendors to hike retail prices to protect their profit margins.

This is particularly damaging to the entry-level and mid-tier segments. Devices priced under $100 are expected to see a massive 31% decline, as thin profit margins make it impossible for brands to absorb higher component costs.

Omdia notes that many manufacturers in the $100–$399 range are losing priority in the supply chain to AI server demands, which are currently locking in production capacity.

Geopolitical volatility is further darkening the outlook. Tensions in the Middle East risk driving up energy prices and freight costs, while foreign-exchange instability weakens the purchasing power of consumers in emerging markets.

Analysts warn that if these pressures intensify, the market could face a “downside scenario” with shipments plunging by more than 15% – a contraction worse than the industry saw in 2022.

However, the pain will not be felt equally across the board. The premium segment remains a notable outlier, with devices priced above $800 expected to grow by 4% in 2026.

Giants like Apple and Samsung are better positioned to weather the storm due to their stronger brand loyalty and supply chain advantages. Samsung, in particular, benefits from its internal semiconductor capabilities, allowing it more secure access to components currently in short supply.

As the industry prepares for a lean year, vendors are expected to simplify product configurations and shorten production cycles. For the average consumer, 2026 may be defined by fewer budget-friendly options and longer wait times for upgrades as the market shifts its focus to high-value innovation over volume.

Omdia 

For latest tech stories go to TechDigest.tv