Smartphone shipments down 11pc after sustained chip shortage

Memory shortage now a ‘full-blown demand issue’ for the smartphone market, says Counterpoint analyst.

The memory crunch has dragged down global smartphone shipments to the lowest second-quarter levels in 13 years.

Manufacturers producing cheaper gadgets saw their shares take the steepest drop after passing price hikes over to consumers. Analysts expect further price increases and a harsher squeeze for memory components.

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

According to Counterpoint research, smartphone shipments tumbled 11pc year-on-year this quarter globally, as memory suppliers prioritise DRAM and NAND for AI data centre needs over consumer electronics.

Entry-level and mid-tier devices faced repeated price hikes, forcing consumers to pivot to more expensive brands or pause device upgrades. Component shortages has rendered these cheaper devices “structurally unfeasible at previous price points”, Jain said. Smartphone prices are poised to jump by as much as 13pc this year.

According to the IDC, most Android vendors in China responded to the growing component costs by raising prices, which directly dampened consumers’ willingness to upgrade their devices.

Xiaomi, Oppo and Vivo, leading manufacturers for cheaper electronics, each saw their shipments decline in double digits this quarter. Though, the three of them together still captured more than 40pc of the global smartphone shipment this quarter.

“Alongside the memory shortage, geopolitical tensions in the Middle East bumped up oil and shipping costs, further inflating smartphone prices,” said the Counterpoint analyst.

“This coincided with a broader macro squeeze, slower global growth, higher inflation and record-low consumer sentiment which hit price-sensitive buyers the hardest.”

Samsung remains the global lead, making extra gains this quarter to capture 24pc of the smartphone shipment share. The South Korean manufacturer held up well in India and the Middle East, supported by better product availability, fewer price hikes and aggressive summer promotions, Counterpoint found.

Apple, meanwhile, took the second position globally, capturing 20pc of the market – up from 17pc in the same quarter last year. The iPhone-maker was the only one to avoid smartphone price hikes during this quarter. However, analysts expect that to change in the near future.

Apple also performed well in China, where it saw sales grow in double digits. Alongside Apple, Huawei was the only major Chinese manufacturer to see positive growth in smartphone shipments.

Overall, shipments in the country declined by around 4.3pc year-over-year, marking the fifth straight quarter of decline.

According to the IDC, Huawei and Apple kept prices steady while the rest of the Android producers in China raised them. Plus, Apple’s early signalling of upcoming price increases pulled in more customers purchasing the iPhone 17 series sooner than they might have otherwise, the report found.

“Huawei and Apple held their prices steady while competitors were raising theirs, and that gave hesitant buyers a reason to go ahead and purchase in a quarter when most of the market was giving them a reason to wait,” says Arthur Guo, a research analyst for client devices research at IDC China.

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