Global smartphone shipments hit 14-year low as memory chip shortage drives up phone prices

A severe shortage of memory chips has driven up production costs, leading to a massive drop in global smartphone shipments.

In Short

• Global smartphone shipments plummeted 20% year-on-year in Q3 2026, hitting a 14-year low.
• Rising memory chip costs, driven by the AI boom, have forced brands to increase retail prices.
• Samsung led the market with a 23% share, while Apple crossed the 20% mark for the first time in a third quarter.

Have you been planning to buy a new smartphone recently? If so, you might have felt that prices have quietly crept up across all price brackets. You aren't imagining things. The global smartphone market just suffered its worst third-quarter slump in 14 years. The reason? A severe shortage of memory chips is making phones much harder to build and significantly more expensive to buy.

According to preliminary estimates from a recent Counterpoint Research report, global smartphone shipments dropped by a massive 20% year-on-year in the third quarter (July to September) of 2026. To put that into perspective, this is the lowest third-quarter shipment volume the tech industry has seen since 2012.

Why are smartphone prices going up?

The primary culprit behind this slump is an ongoing crisis in memory components, specifically DRAM (RAM) and NAND flash storage. But why is there a shortage? The boom in artificial intelligence (AI) is to blame. Huge AI data centres and new infrastructure projects are rapidly buying up the global supply of memory chips. Because of this massive demand, there simply aren't enough chips left at affordable prices for regular smartphones.

This huge surge in memory prices has sharply increased what the industry calls the Bill of Materials (BOM), the core cost of all the parts needed to manufacture a phone. Smartphone brands aren't absorbing these heavy losses. Instead, they are passing the extra manufacturing costs directly onto buyers. This has led to retail prices for smartphones increasing globally, and brands are focusing more on their profit margins rather than selling a high volume of phones.

Shilpi Jain, a Senior Analyst at Counterpoint Research, noted that Q3 2026 was the second quarter in a row to feel the full impact of the memory crisis.

"Consumers are holding on to their devices longer than estimated, increasingly considering refurbished devices and prioritizing higher-value devices," Jain explained. She added that phone makers are adjusting their strategies to protect their profitability.

This means everyday buyers looking for budget-friendly phones are feeling the pinch the most, as rising costs push affordable phones out of their usual price brackets.

Samsung and Apple lead the pack

Despite fewer phones being shipped overall, tech giants Samsung and Apple actually managed to capture a larger share of the market compared to the same period in 2025.

Samsung kept its position as the world’s top smartphone maker. The South Korean company captured a 23% global market share in Q3 2026. This was helped by strong demand for its Galaxy Z Fold8 series and a stable supply of parts for its mid-range phones. However, even Samsung saw its total shipments dip by 3% compared to last year.

Apple came in a very close second. The iPhone maker secured a 22% market share. This is a big milestone for Apple, as it marks the first time the company has ever crossed the 20% market share threshold during a third quarter. However, Apple’s actual shipment numbers still declined year-on-year.

According to Counterpoint, this drop was mainly because Apple didn't launch a standard base iPhone 18 model this year, resulting in fewer phones hitting the market in the launch month compared to the full iPhone 17 lineup release in Q3 2025.

Chinese brands struggle in the budget segment

Chinese smartphone brands, which rely heavily on selling high volumes of budget and mid-range phones, took the hardest hit during this memory chip shortage.

Xiaomi held onto the third spot globally, but its market share dropped down to 10%. The company saw its shipments fall by more than a staggering 30% year-on-year. To protect its profit margins, Xiaomi had to intentionally reduce its focus on low-cost devices and pull back from some overseas markets.

Oppo and Vivo also faced tough times, both recording shipment declines of over 20% during the quarter.

Will things improve soon?

If you are hoping for smartphone prices to drop in the coming months, the news isn't great. Counterpoint Research warned that the outlook for the rest of 2026 "remains challenging."

"Production cuts, tighter portfolios, and greater focus on premium devices are likely to continue," Counterpoint stated. Until the memory chip supply stabilizes and costs come down, expect brands to keep their focus on pricier, premium phones, while everyday buyers might have to hold onto their current devices a little longer.

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