Global smartphone shipments fell by 4 per cent year-on-year in the second quarter of 2026 as an ongoing memory crisis disrupted supply chains and pushed up component costs, according to the latest research from market intelligence firm Omdia.

The decline has created a sharply polarised smartphone market, with vendors experiencing very different outcomes depending on their scale, product strategies, pricing decisions and target customers.

Samsung and Apple were the only major manufacturers to buck the downward trend, increasing shipments while strengthening their market positions compared with the second quarter of 2025.

Samsung remained the world’s largest smartphone vendor during the quarter, capturing 22 per cent of the global market, helped by resilient demand and stronger supply availability.

The delayed launch of the Galaxy S26 series shifted some premium smartphone demand into the second quarter, while Samsung also gained ground in the budget segment as Chinese competitors adopted more cautious approaches.

Several Chinese smartphone makers reduced product ranges and raised device prices as they attempted to manage rising costs, allowing Samsung to strengthen its position among more affordable devices.

Apple recorded its strongest second-quarter performance on record, reaching a 20 per cent market share during what is traditionally its weakest quarter of the year.

The iPhone 17 series contributed to one of the strongest upgrade cycles in the company’s history, while Apple also benefited from keeping pricing relatively stable as many rivals increased prices.

However, after Apple raised prices across several other product categories towards the end of the second quarter, questions remain over whether similar increases could affect iPhone pricing later in 2026.

Beyond the two market leaders, mass-market declines placed significant pressure on other major manufacturers.

Xiaomi maintained third place globally with an 11 per cent market share, while OPPO ranked fourth with 10 per cent as it restructured operations around its three-brand strategy.

Vivo completed the top five rankings with an 8 per cent market share.

“The steepest volume drops hit the sub-$400 mass market segment, where supply constraints are tightest, profit margins are slimmest, and price sensitivity is highest,” Principal Analyst Runar Bjorhovde said.

“To adapt, vendors are shifting their strategies from volume to value by reoptimising portfolios and adjusting retail pricing,” Bjorhovde added.

Managing rising component costs has become increasingly difficult, with some manufacturers facing memory costs more than four to five times higher than a year earlier.

Memory and storage components now account for more than 60 per cent of the bill of materials for budget smartphones and more than 30 per cent for premium devices.

While memory and storage prices represent the biggest challenge for smartphone manufacturers, they are not the only source of pressure, with new semiconductor bottlenecks, including constraints affecting chip foundries, adding further costs.

“While vendors hope for near-term price corrections, memory price declines are expected to begin at the earliest in the second half of 2027,” Research Manager Le Xuan Chiew said.

“However, prices are unlikely to return to pre-2025 levels,” Chiew added.

She added that smartphone companies’ adjustments should not be viewed as temporary responses but as longer-term strategic changes designed to improve flexibility and sustainability.

Omdia expects the most significant shipment declines to emerge over the next two quarters, when seasonal demand peaks driven by new product launches, holidays and shopping events coincide with restricted memory chip availability.

“Consequently, vendors are expected to lean further into the higher price segments to capitalise on customers seeking device upgrades in 2026’s sales season,” Bjorhovde stated.

However, while moving towards more expensive devices can protect manufacturer margins and revenues, it also reduces the range of affordable options available to consumers.

Many buyers in lower-income segments are expected to delay purchases, lower their expectations, use financing options or turn to refurbished smartphones.

The market shift comes as manufacturers attempt to balance rising production costs with weakening demand, creating a difficult environment for companies that have traditionally relied on high-volume sales of affordable devices.