Global phone shipments hit a 14-year low as chip costs and AI demands squeeze makers

Worldwide smartphone shipments dropped by 20 percent compared to last year, hitting the lowest third-quarter level since 2012. Counterpoint Research released these preliminary estimates on Monday, pointing to soaring costs for memory chips and supply shortages as major causes. AI infrastructure projects have cornered chip supplies, driving up production expenses and forcing makers to raise retail prices.

Market Impact

Manufacturers have cut shipments and chosen to focus on profits rather than sales volume. Senior analyst Shilpi Jain noted that consumers are holding onto their phones longer, buying refurbished units, and picking higher-value devices. Samsung stayed in the top spot with a 23 percent market share, backed by demand for its Galaxy Z Fold8 series and steady parts for mid-range models, though its shipments dropped 3 percent from last year. Apple reached a 22 percent market share, passing the 20 percent mark for a third quarter for the first time despite lower shipments. The lack of a base iPhone 18 model meant a smaller launch-month channel fill than the full iPhone 17 lineup the previous year.

Brand Declines

OPPO and vivo both saw shipment drops of more than 20 percent. Xiaomi suffered a fall of over 30 percent, bringing its market share down to 10 percent. The company pulled back from lower-priced devices and certain overseas markets to protect its profit margins. Counterpoint warns that the outlook for the rest of 2026 remains tough.

Context

Global electronics supply chains often face severe pressure when competing technology sectors like artificial intelligence suddenly demand massive volumes of specialized components. When core parts like memory chips become scarce and expensive, mobile phone brands must quickly shift their business strategies to protect profit margins rather than chasing sheer sales volume.