Global Smartphone Production Likely to Decline in 2026 Due to Chip Shortage

Global smartphone production is expected to face a setback in 2026 as shortages of memory chips push up costs and limit manufacturing, according to new research from Counterpoint Research. The firm estimates that worldwide smartphone shipments could fall by 2.1 per cent next year, reversing the expected growth of 3.3 per cent in 2025.

Counterpoint has also sharply lowered its earlier outlook for 2026, which had projected slight growth, citing rising pressure across the supply chain. Average smartphone prices are likely to increase by nearly 7 per cent globally, driven by a steep rise of 10 to 25 per cent in overall component costs.

One of the key reasons behind the shortage is the global push for artificial intelligence, which has led chipmakers to focus more on advanced memory used in AI accelerators, leaving fewer supplies for consumer electronics. This has created a tight supply of essential memory chips used in smartphones and other devices. Several electronics brands have already warned of possible price hikes, while others are building inventory to manage future cost increases.

Budget and entry-level smartphones are expected to be hit the hardest, especially among Chinese brands with thinner profit margins. Counterpoint believes premium-focused companies such as Apple and Samsung are better placed to manage the situation, while others may respond by reducing specifications, limiting memory options, or encouraging buyers to shift toward higher-priced models.

Source: Business Standard