Memory shortages are now ‘a matter of absolute demand’ in the smartphone market, says analyst Counterpoint.
The memory crunch slowed global smartphone shipments to the lowest levels in the second quarter in 13 years.
Manufacturers of cheap gadgets have seen their shares fall sharply after raising prices for consumers. Analysts expect further price increases and a strong squeeze on memory components.
“The global memory crisis has now overtaken all other factors as the single biggest drag on the smartphone industry. What started as a parts crisis last year is now a demand-driven crisis,” said Counterpoint senior analyst Shilpi Jain.
According to Counterpoint research, smartphone shipments fell 11pc year-on-year this quarter globally, as memory suppliers prioritize DRAM and NAND for AI data center needs over consumer electronics.
Entry-level and mid-tier devices have faced repeated price hikes, forcing consumers to switch to more expensive brands or halt device development. A shortage of components has made these cheap devices “structurally unfeasible at previous prices,” Jain said. Smartphone prices are set to jump 13pc this year.
According to IDC, many Android vendors in China have responded to rising component costs by raising prices, directly dampening consumers’ willingness to upgrade their devices.
Xiaomi, Oppo and Vivo, the leading manufacturers of cheap electronics, each saw their shipments drop by double digits this quarter. Even so, the three together still captured more than 40pc of global smartphone shipments this quarter.
“On the memory shortage side, political tensions in the Middle East have pushed up oil and transportation costs, and smartphone prices have also risen,” said a Counterpoint analyst.
“This has been accompanied by broad contraction, slower global growth, lower inflation and lower consumer sentiment which has hit price-sensitive consumers hard.”
Samsung remains the world leader, making further gains this quarter to capture a 24pc share of smartphone shipments. The South Korean manufacturer has held up well in India and the Middle East, supported by better product availability, few price hikes and aggressive summer promotions, Counterpoint found.
Apple, meanwhile, took second place globally, taking 20pc of the market – up from 17pc in the same quarter last year. The iPhone maker was the only one to avoid a rise in smartphone prices this quarter. However, analysts expect that to change in the near future.
Apple is also doing well in China, where it has seen sales grow by double digits. Alongside Apple, Huawei was the only major Chinese manufacturer to see positive growth in smartphone shipments.
Overall, exports fell by around 4.3pc year-on-year, marking the fifth consecutive quarter of decline.
According to IDC, Huawei and Apple are keeping prices constant while other Android manufacturers in China are increasing them. Also, Apple’s early signaling of an upcoming price increase drew more customers to buy the iPhone 17 series sooner than they would have otherwise, the report said.
“Huawei and Apple held their prices steady while rivals raised theirs, and that gave reluctant buyers a reason to keep buying in a quarter when most of the market was giving them a reason to wait,” said Arthur Guo, research analyst for consumer electronics research at IDC China.
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