Global smartphone shipments fell 11 percent during the second quarter of 2026, marking the weakest second-quarter performance since 2013 as a prolonged memory chip shortage continued to ripple through the consumer electronics industry. According to Counterpoint Research, soaring DRAM and NAND memory prices—driven largely by manufacturers prioritizing artificial intelligence data centers over consumer devices—have forced smartphone makers to raise prices, particularly on entry-level and mid-range models, suppressing consumer demand worldwide. While Samsung regained the top global market share and Apple modestly increased shipments thanks to strong premium-device demand, manufacturers more dependent on lower-cost phones experienced significantly steeper declines. The trend underscores how the AI infrastructure race is increasingly redirecting critical semiconductor resources away from everyday consumer products, leaving consumers to absorb higher costs while technology companies focus investment on more profitable AI markets.
Sources
- https://www.theepochtimes.com/business/global-smartphone-shipments-hit-13-year-low-in-2nd-quarter-amid-memory-chip-shortage-6061350
- https://www.reuters.com/business/media-telecom/global-smartphone-shipments-second-quarter-hit-lowest-13-years-memory-chip-2026-07-13
- https://www.reuters.com/world/china/global-smartphone-market-faces-record-annual-decline-chip-crunch-worsens-2026-06-01
Key Takeaways
- • Global smartphone shipments dropped 11 percent in the second quarter, reaching their lowest level for the period in thirteen years as memory chip shortages continued to constrain production and increase prices.
- • AI infrastructure demand is consuming an increasing share of global memory chip production, forcing consumer electronics manufacturers to compete for limited supplies and pass higher component costs on to buyers.
- • Premium manufacturers have weathered the downturn better than companies focused on budget devices, suggesting consumers are delaying upgrades rather than accepting higher prices for lower-end smartphones.
In-Depth
The latest smartphone shipment figures illustrate one of the unintended consequences of the global artificial intelligence boom. While governments and technology giants celebrate unprecedented investment in AI infrastructure, ordinary consumers are paying the price through more expensive smartphones and fewer affordable choices. Memory chip manufacturers have increasingly shifted production toward lucrative AI data center customers, where profit margins far exceed those found in consumer electronics. That business decision makes financial sense for suppliers, but it has left smartphone manufacturers scrambling for components and forced them to raise prices.
The market response has been predictable. Consumers are holding onto existing devices longer, particularly when yearly hardware improvements have become increasingly incremental. Rather than paying hundreds of dollars more for modest upgrades, many buyers appear content to extend replacement cycles, especially in the budget and mid-range segments where price sensitivity remains highest.
Samsung and Apple have largely escaped the worst of the downturn because their premium customer bases have proven more resilient, but smaller manufacturers have suffered disproportionately. That growing divide highlights an industry becoming increasingly concentrated around companies with the scale and financial strength to absorb supply shocks.
From a broader economic perspective, the situation raises legitimate questions about whether the relentless race to dominate artificial intelligence is creating distortions throughout the technology supply chain. As capital, manufacturing capacity, and semiconductor production continue flowing toward AI infrastructure, traditional consumer technologies risk becoming secondary priorities. The result is an uncomfortable reality: consumers are effectively subsidizing the AI revolution through higher prices and fewer affordable options. If current trends continue into 2027 as analysts expect, policymakers and industry leaders alike may need to consider whether the balance between AI investment and consumer technology has shifted too far toward the former.