Global smartphone market faces record annual decline as chip crunch worsens

By Che Pan and Casey Hall

BEIJING, June 1 (Reuters) - The planetary smartphone marketplace is heading for its steepest yearly contraction connected record, with shipments projected to slump by 13.9% ‌this twelvemonth to 1.08 cardinal units, Counterpoint Research said connected Monday, citing a worsening shortage ‌of representation chips.

The forecast is simply a downgrade from the 12.4% diminution projected successful February, with the compression successful planetary spot ​supply exacerbated by the Iran war.

IMPACT MOST ACUTE AT BUDGET END OF MARKET

The interaction is being felt astir acutely successful lower-end smartphones arsenic chipmakers displacement accumulation capableness to AI-related chips, making entry-level devices little economical to produce.

Global smartphone wholesale prices roseate 14% successful the archetypal 4th portion shipments fell 3.1% twelvemonth connected year. ‌That inclination is expected to proceed ⁠as inventory built earlier the proviso daze becomes depleted, with immoderate models priced beneath $150 apt to vanish from the market.

"Smartphone makers successful the debased and mid-tier ⁠are caught betwixt outgo increases they cannot sorb and consumers with constricted spending power," said Wang Yang, a main expert astatine Counterpoint, an autarkic probe institution that publishes quarterly smartphone shipment data.

"The question is nary longer ​how ​to turn shipments oregon marketplace share, but whether to ​remain successful the marketplace astatine all."

The representation ‌chip shortage is the astir terrible supply-side disruption the smartphone manufacture has faced, Wang said, adding that manufacturers are incapable to offset the interaction done pricing oregon merchandise changes.

PREMIUM END OF THE MARKET MORE RESILIENT

The premium conception has proven much resilient. Apple posted grounds gross for the archetypal 3 months of the year, helped by customers upgrading to its iPhone 17 series. Apple's 2026 shipments are expected ‌to stay level earlier rising 5% adjacent year, Counterpoint ​projections show.

With much unchangeable spot proviso and stronger margins than ​many rivals, Apple is good placed to ​gain marketplace stock and could look little unit to rise prices.

Samsung Electronics kept ‌volumes dependable successful the archetypal 4th and is ​expected by Counterpoint to ​register lone a 4% diminution successful shipments implicit the afloat year, outperforming the wider marketplace acknowledgment to unchangeable proviso and a accordant merchandise line-up.

Transsion, which is heavy exposed to the marketplace ​for smartphones priced beneath $150, is ‌forecast to endure a 32% driblet successful shipments this year. Rivals Xiaomi and Honor, meanwhile, ​are projected to station full-year declines of 28% and 20% respectively, Counterpoint said.

(Reporting by ​Che Pan and Casey HallEditing by David Goodman)