Price Hikes Trigger Smartphone Sales Slump

Global smartphone sales dropped to their lowest second-quarter level in 13 years as manufacturers passed on to consumers the rising cost of memory components, Counterpoint Research said in a Monday (July 13) press release.

Total shipments fell 11% year over year in the second quarter to reach the lowest second-quarter level since 2013, according to the release.

However, Apple, the only major manufacturer that didn’t make smartphone price hikes during the quarter, saw its shipments increase 3%, the release said. The company also benefited from the continued strength of its iPhone 17 series.

Memory prices continued to rise during the second quarter as memory suppliers prioritized meeting the demand from artificial intelligence data centers over that from consumer electronics, per the release.

Smartphone demand was also impacted by geopolitical tensions in the Middle East, which further inflated smartphone prices, as well as a broader macro squeeze, slower global growth, higher inflation and record-low consumer sentiment, according to the release.

“The global memory crisis has now overtaken every other factor as the single biggest drag on the smartphone industry,” Counterpoint Research Senior Analyst Shilpi Jain said in the release. “What started as a components issue last year is now a full-blown demand issue.”

“The entry and mid-tier devices, which account for a majority of the world’s smartphone volumes and are the most exposed to BOM [Bill of Materials] economics, become structurally unfeasible at previous price points,” Jain said.

Looking ahead, Counterpoint Research expects that global smartphone shipments will decline by about 14% for the full year and that the global memory shortage will persist in 2027.

The company said that “overall demand recovery is unlikely until memory supply conditions improve substantially.”

It was reported in January that the expansion of generative AI was beginning to alter the economics of consumer electronics in visible and lasting ways. Memory components that once flowed predictably into smartphones, personal computers and gaming hardware were increasingly being diverted toward large-scale AI systems under long-term supply agreements.

In March, it was reported that the two trends topping the agenda at the mobile industry event MWC Barcelona 2026 were the shortage of memory chips needed by the smartphone industry as well as the incorporation of AI features into the latest mobile devices.

It was reported in June that Apple raised the prices of its Macs and iPads, attributing the increases to the surging costs of components used in the devices but didn’t change the price of its iPhones.