Smartphone production will decline in 2026 due to the chip crisis.

Impact of Chip Crisis on Smartphone Production

According to research firm Counterpoint Research, the memory chip shortage will constrain smartphone production by increasing costs. Global smartphone shipments are expected to decline by 2.1% in 2026.

Background of the Forecast

This decline presents a contrasting approach to Counterpoint's projected 3.3% growth expectation for this year. Moreover, average smartphone prices are expected to rise by 6.9% in 2026.

Developments in the Semiconductor Sector

The accelerated global developments in artificial intelligence have driven semiconductor manufacturers, like Nvidia Corp., towards advanced memory production. This situation has led to a critical shortage of dynamic random access memory (DRAM), which is essential for many electronic products ranging from laptops to electric vehicles.

Response of Consumer Electronics Manufacturers

In recent months, consumer electronics manufacturers like Xiaomi have raised concerns about potential price increases, while Lenovo Group has started stockpiling memory in anticipation of rising costs.

Market Dynamics and Effects

Nintendo shares experienced a significant drop in December due to concerns over the flagship Switch 2 console. In the smartphone market, Chinese brands like Honor Device Co. and Oppo are more vulnerable due to low profit margins.

Conclusion and Expectations

According to Counterpoint, the memory chip shortage will particularly negatively affect entry-level smartphones. Senior analyst Yang Wang noted that Apple and Samsung are in the best position to weather difficult times, while others will struggle to balance market share and profit margins.

The impact on consumers will be felt as companies guide users towards higher-end models. Other alternatives include the reuse of old components or selling phones with less memory.