Global smartphone chipset shipments dropped 15 percent year-on-year in the first half of 2026, driven by an acute memory chip shortage and surging component costs. According to market data from Counterpoint Research, the crisis has squeezed entry-level manufacturing, altered brand market shares, and pushed memory prices past system-on-a-chip costs.
The global smartphone hardware ecosystem is facing a challenging period. A severe crunch in DRAM and NAND memory supply, amplified by heavy competition from the rapidly expanding AI data center industry, has fundamentally altered manufacturing costs. During the first half of 2026, memory prices surged by over 300 percent year-on-year in the second quarter alone, according to data published by TechnoSports. That unprecedented spike meant that smartphone memory costs surpassed system-on-a-chip (SoC) costs across every price segment, putting immense pressure on device pricing and brand profitability.
Global SoC Shipments Plunge While Apple and UNISOC Gain Ground
The overall market contraction hit component suppliers hard. Major merchant silicon vendors Qualcomm and MediaTek absorbed the brunt of the damage, with both companies recording estimated System-on-Chip shipment declines of more than 25% compared to the first half of 2025.
Qualcomm’s flagship Snapdragon 8 Elite Gen 5 experienced limited growth in the premium tier, constrained in part by a dual-sourcing strategy adopted by Samsung for the Galaxy S26 series, which incorporated Samsung’s proprietary Exynos 2600 alongside Qualcomm silicon. Softer sales of the Xiaomi 17 series also created headwinds for Qualcomm’s premium shipments. MediaTek faced steep declines in its low-end and entry-level 5G chipsets, though its higher-end Dimensity 9500 series held firm through design wins with brands including Vivo, OPPO, Pocophone, and Redmi.
In contrast, integrated device manufacturers and alternative suppliers posted growth. Apple, Samsung, Google, and UNISOC all managed positive shipment growth during the period, largely protected by integrated supply chains that helped buffer the memory crunch.
UNISOC surged by capitalizing on a pragmatic industry pivot. As OEMs scrambled to protect margins against rising memory bills, many entry-level smartphone models migrated from 5G platforms to UNISOC’s lower-cost 4G offerings to reduce total bill-of-materials costs. UNISOC also made inroads into 5G adoption through strategic partnerships with Pocophone and Redmi.
India Smartphone Market Suffers 10 Percent Decline in Q2 2026
Regional markets highly sensitive to retail pricing bore a heavy burden. That drop marks a worsening from the first quarter of the year, when shipments had declined by 2% year-on-year.
To offset escalating procurement costs for DRAM and NAND, major brands including Samsung, OnePlus, and Vivo introduced retail price hikes across their portfolios over recent weeks. Those increases alienated price-sensitive buyers in entry-level and mid-range tiers. Despite the broader market slowdown, brand rankings shifted: Vivo retained the top market position in India with 17.8% share in Q2 2026 (down slightly from 19.2% in Q2 2025), while Samsung closed the gap, jumping to 17.6% share from 15.5% a year earlier. OPPO expanded to 13.6% and Xiaomi reached 9.4%.
Financing Options Prop Up Premiumization Amid Generative AI Demand
Even as mainstream volumes contract, the industry’s upper tier displays notable resilience. Shipments of Generative AI smartphone SoCs registered 24% year-on-year growth in the first half of 2026, demonstrating that consumers remain willing to pay for advanced AI features in flagship and premium devices.
In price-conscious regions like India, this premiumization trend is heavily sustained by credit infrastructure. Counterpoint Research projects that consumer financing—including credit and debit card EMIs and non-banking financial company loans—will account for 42% of smartphone sales in India in 2026, climbing from 35% in 2025.
“Apple’s market share increased by 4% in H1 2026 from H1 2025, propelled by the robust performance of the iPhone 17 series.”
Shivani Parashar, Senior Analyst at Counterpoint Research, via TechnoSports
Outlook Pointing to Prolonged Supply Constraints Through 2027
Relief remains distant for manufacturers and buyers alike. Counterpoint Research estimates that global smartphone chipsets will decline by 14% across the full year of 2026, with entry-level shipments expected to plummet by over 30% annually.
“In H1 2026, smartphone memory costs surpassed SoC costs across all price segments, and we do not expect the memory supply to normalize before H2 2027, which means the smartphone industry could experience another difficult year in 2027.”
Soumen Mandal, Principal Analyst at Counterpoint Research, via TechnoSports
These persistent supply constraints and rising costs are likely to continue pressuring the global smartphone market until the memory supply finally stabilizes in late 2027.
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