The AI spending growth produced an surprising casualty: the worldwide smartphone market.
International smartphone shipments fell 11% yr over yr within the second quarter of 2026, the bottom ever since 2013. Counterpoint attributed a lot of the slowdown to reminiscence suppliers shifting extra manufacturing towards higher-margin AI demand, which pushed up DRAM and NAND costs for smartphone makers.
Regardless of the decline in shipments, sure manufacturers nonetheless reported optimistic metrics. Counterpoint Analysis reported that Samsung holds the highest market share, whereas Apple bucked the development with a slight however noticeable development in shipments whereas sustaining a large market share.
This displays stronger demand for premium smartphones.
The collision of two sectors
The smartphone market’s newest slowdown started in AI knowledge facilities, not with smartphones, the place booming demand for computing {hardware} has elevated competitors for the reminiscence chips that energy every little thing from graphics processors to cellular units.
Counterpoint Analysis mentioned reminiscence suppliers responded by allocating extra manufacturing to AI corporations, decreasing the provision of DRAM and NAND chips utilized in smartphones. That reallocation has left smartphone producers with tough selections: take up increased element prices, cross them on by way of increased costs, or search for financial savings elsewhere within the manufacturing course of.
These pressures started to translate into real-world results. Counterpoint Analysis cited that buyers have responded by holding on to their present units longer. On the identical time, some have more and more turned to the pre-owned market slightly than shopping for new handsets, contributing to the weakest second-quarter smartphone shipments.
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An uneven unfold of market results
Whereas the worldwide smartphone market recorded an 11% year-over-year decline in shipments through the second quarter, the slowdown was not evenly distributed. Counterpoint mentioned the best strain fell on the price range and mid-range segments, the place producers have far much less room to soak up rising element prices with out growing costs.
Separate supply-chain evaluation from Omdia estimates that DRAM and NAND now account for roughly 60% of the invoice of supplies for smartphones priced beneath $400, rising to greater than 64% for units beneath $99.
With reminiscence making up such a big share of manufacturing prices, producers of lower-cost smartphones have confronted higher strain than these competing within the premium market. Particularly, manufacturers like Xiaomi, Oppo, and Vivo recorded among the steepest declines in shipments.
Samsung emerged because the world’s largest smartphone vendor with a 24% market share, though its shipments had been additionally impacted. Apple, in the meantime, reversed the downturn with a 3% improve in shipments, trailing Samsung at 20% market share.
The reminiscence crunch could not ease anytime quickly
Even when client demand stabilizes, smartphone producers could proceed to face increased manufacturing prices. The outcome will in the end fall on shoppers who could proceed to carry on to their outdated units or take into account refurbished options, as changing a smartphone stays an costly determination.
That dynamic displays a broader shift within the semiconductor business. Slightly than responding primarily to smartphone demand, reminiscence manufacturing is more and more influenced by the speedy growth of AI computing, which gives considerably increased profitability.
Associated Information: Apple is reportedly scaling again some iPhone 17 manufacturing as rising reminiscence prices fueled by AI demand proceed to strain smartphone margins.
