Memory crunch, Middle East tensions hit smartphone demand

Global smartphone shipments slumped in Q1 2026, resulting in the end of ten consecutive quarters of growth as soaring memory costs and geopolitical tensions weighed on demand, according to a new report from IDC. Preliminary data for the quarter indicated shipments fell 4.1 per cent year-on-year to 289.7 million units, marking the first decline since 2023. The research company warned the downturn is likely to be “a mild precursor for what lies ahead in 2026” as handset makers grapple with limited memory supply and higher component, logistics and energy costs linked to war in the Middle East. Samsung and Apple were the only vendors in the global top five to record growth, pointing to the relative resilience of the premium segment. Samsung regained top spot, with shipments rising 3.6 per cent to 62.8 million units propelled by demand for its Galaxy S26 Ultra and its A-Series devices. Apple followed closely with 61.1 million units, up 3.3 per cent, supported by strong iPhone 17 sales and robust growth in China. In contrast, leading Chinese vendors saw sharp declines. Xiaomi posted the steepest fall among the top five, with shipments down 19.1 per cent, while Oppo and Vivo dropped 9.9 per cent and 6.8 per cent respectively. Outside the top five, Honor, Motorola and Huawei all posted growth, with Honor recording the strongest increase among the top 10 owing to overseas expansion. Price hikes Nabila Popal, senior research director for Worldwide Consumer Devices at IDC, noted that handset prices have climbed by as much as 40 to 50 per cent in several emerging markets, putting additional pressure on demand in price sensitive regions. Vendors are responding by tightening costs, reducing channel support and lowering specifications on some models. Popal said the market has entered “one of its most challenging periods”, citing “acute memory supply constraints” and rising component costs. “Limited memory availability is forcing shipment reductions, while sharply higher memory prices are pushing up bill-of-materials cost and forcing price hikes by many top brands,” she explained. Looking ahead, IDC expects memory costs to stabilise by H2 2027 and average selling prices to continue rising as vendors push further into premium segments. Counterpoint Research data published last week reported first quarter shipments fell 6 per cent, also blaming ballooning memory costs as the primary driver behind the downturn. The post Memory crunch, Middle East tensions hit smartphone dema