Smartphone shipments hit 11-year low as AI boom raises memory prices
DRAM and NAND shortages caused by AI computing boom are hammering budget phone sales.
A new report from Counterpoint reveals that global smartphone shipments plunged 11% year-over-year in Q2 2026, the weakest second quarter since 2013. The primary driver: a severe shortage of DRAM and NAND flash memory. Manufacturers have diverted production capacity to AI data centers and high-end computing, leaving fewer components for consumer devices. Prices for memory chips have skyrocketed, hitting budget devices especially hard. Omdia notes that in phones priced under $500, memory now represents half of the total bill of materials, compared to just over a quarter for flagships. This has forced OEMs to raise prices across the board, prompting many consumers to delay upgrades.
The pain is not evenly distributed. Samsung reclaimed the top spot with 24% of global shipments, buoyed by strong Galaxy S26 series sales and aggressive promotions in emerging markets like India and the Middle East. Apple held steady with 3% growth, benefiting from stable pricing on current iPhones—though that may change with upcoming releases. In contrast, Oppo, Vivo, and Xiaomi all saw declines. Google’s Pixel lineup, though far from the top five, grew 16% thanks to Pixel 10 sales. Analysts expect the component shortage to persist into 2027, accelerating a trend toward longer phone support (seven years from Samsung, Google, and Apple) and the gradual elimination of low-margin budget models.
- Global smartphone shipments fell 11% in Q2 2026 to lowest level since 2013 according to Counterpoint
- DRAM and NAND prices have surged due to AI infrastructure demand, making memory half the cost of sub-$500 phones
- Samsung and Apple maintained or grew market share while Oppo, Vivo and Xiaomi declined; Google Pixel saw 16% growth
Why It Matters
Rising memory costs will force smartphone makers to raise prices and phase out budget models, changing upgrade cycles.